India to cut Iran oil imports next year
India plans to cut oil imports from Iran by 10 to 15 percent in
the next fiscal year, and more if Tehran does not lower prices to
help cover higher costs resulting from Western sanctions, a
government source said, Trend news agency reported referring to
Reuters.
Iran's top Asian oil buyers - China, India, Japan and South Korea -
have all reduced imports after the United States and the European
Union imposed sanctions aimed at curbing Tehran's nuclear
ambitions.
The sanctions have more than halved Iran's oil exports this year,
costing Tehran up to $5 billion a month in lost revenue.
"Next year our imports will be 10 percent to 15 percent less than
this year," said a government official with direct knowledge of the
matter, who declined to be identified because he is not authorized
to speak to the media.
"If they don't cut prices, the decline will be substantial. Indian
refiners have genuine problems with credit availability."
India, the world's fourth-biggest oil importer and Iran's
second-biggest client, relies on outside supplies for 80 percent of
its oil needs, or about 3.5 million barrels per day (bpd).
Officials at state refiners said they had yet to receive any
directive from the government to cut imports from Iran in the year
beginning April 2013, when annual contracts start.
But refiners would probably cut imports anyway because of high
costs, the officials said.
The push for cheaper prices is similar to a move by Chinese refiner
Sinopec, Iran's biggest buyer, last year. As rising international
pressures forced other buyers out of the market for Iranian oil,
Sinopec strong-armed Iran into giving it better terms for its
annual oil purchases.
The United States wants importing countries to make further cuts in
purchases from Iran in 2013 to avoid sanctions, a State Department
source said this month.
South Korea has already told the United States it will cut imports
by about a fifth from a year earlier in the six months to May,
government and industry sources said this month.
On Wednesday, Japan's top refiner said the country's crude oil
imports from Iran would be about 15 percent lower next year.
There is no clear indication yet on 2013 imports by China. Daily
imports into China in the first 10 months of 2012 were down 22
percent on the 2011 figure.
For the current fiscal - and contract - year, New Delhi had asked
refiners to cut purchases from Iran by 15 percent. Refiners have
bought more from Saudi Arabia, the top supplier, and Iraq, pushing
Iran out of the number two slot.
Banks have refused to issue short-term dollar credit, also known as
buyers' credit, for Iranian oil imports because of the sanctions,
officials at refiners said.
Indian refiners say Iranian crude has become more expensive because
sanctions force them to borrow at high domestic interest rates to
finance purchases and face continuing volatility in the rupee
against the dollar.
"Economically Iranian oil is not viable. My borrowing cost has gone
up," an official at a state-run refiner said.
Starting on February 6, U.S. law will prevent Iran from bringing
home its oil export earnings, a measure that will lock up a
substantial amount of Tehran's funds, U.S. officials have said.
That could affect the continuation of India's existing payment
system with Iran, which settles 55 percent in euros through
Turkey's Halkbank HALK.IS. The rest is settled in rupees through a
local bank.