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Domestic oil refiners have drawn up contingency plans to meet the shortfall if crude oil supplies from Iran are slashed.
Speaking on the sidelines of the World Energy Policy Summit, Oil and Natural Gas Corporation (ONGC) Chairman and Managing Director, Shashi Shanker, said, “There are contingency plans in place. We have some agreements with different countries.”
Shanker was responding to questions on the way ahead for ONGC’s refinery subsidiaries, HPCL and MRPL, once crude oil supplies from Iran are halted due to the US sanctions. The sanctions kick in from November 4.
Not dependent only on Iran
“In every long term agreement, there is a minimum offtake quantity plus there is some flexibility. We can draw more from other suppliers because we are not dependent only on Iran,” Shankar explained.
Essentially, the refiners can opt for sourcing more crude oil from their other suppliers. The additional requirement can be met well within the existing terms of agreement.
Assuring that there will not be any shortfall, Director, Refineries at IndianOil, BV Rama Gopal said, “India’s energy demand will be met, with or without Iran.”
Gopal explained that the crude volumes are contracted annually. “The total crude quantity is finalised for the year. So if I lift now more, at the end of the year it has to be slashed,” Gopal said.
Effectively the refiner can buy more volumes of crude earlier during the year and meet the contractual requirements. Similarly, they may also buy lesser crude oil from another contract earlier during the year and then offset any shortfalls later during the year.
Imports from Iran up 44% in Aug
According to data released by the Directorate General of Commercial Intelligence and Statistics (DGCIS), India’s crude oil imports from Iran rose by 43.72 per cent to 2.07 million tonnes (mt) in August.
Cumulatively, India’s oil imports from Iran in the first five months (April to August) of this financial year rose 43.69 per cent to 13.32 mt against 9.26 mt imported during the same period a year ago.
But does this mean that crude oil supplies from Iran to India will be stopped completely?
Not so, according to Shanker. He said, “Based on the past experience I can say that cutting to zero is unlikely.” “What is going to happen from today regarding supplies from Iran is not clear. As of now, no significant steps are being taken. We are adopting a wait-and-watch approach,” Gopal added.
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