NEW DELHI–Mangalore Refinery & Petrochemicals Ltd., India’s largest importer of Iranian crude, might be forced to stop oil imports from the Persian Gulf nation if it can’t renew the insurance on its refinery, a company executive said Thursday.
Local insurers have been reluctant to take the risk of providing insurance to refineries processing Iranian crude, as they are mainly dependent on reinsurance in the overseas markets to hedge their insurance risk. But global reinsurers are staying away due to western sanctions on Iran-related financial transactions.
“Look, insurance is an issue that may lead to a complete halt of shipments from Iran for our refinery,” P.P. Upadhya, managing director of the state-run company, said by phone.
The company is still getting supplies from Iran and has recently written to the federal government to resolve the insurance issue, but Mr. Upadhya said: “Naturally I would seek more crude from other sources if shipments from Iran completely stops.”
The insurance renewal is due in May.
Mangalore Refinery, a unit of oil and gas explorer Oil & Natural Gas Corp., had lowered its goal of importing crude from Iran this fiscal year to 3.8 million metric tons, or about 74,000 barrels a day, from its earlier target of 5.0 million tons. It bought 6.2 million tons of crude from Iran in the last fiscal year ended on March 31, 2012.
Headquartered in the southern Indian city of Mangalore, the company has crude refining capacity of 15 million tons a year, or 300,000 barrels a day. The refiner in January said it plans to source more crude from Azerbaijan to offset the fall in imports from Iran. It also buys crude from countries including Saudi Arabia, Kuwait and Iraq.
The U.S. and the European Union have shut down the use of its financial system for Iranian crude trade. The U.S. recently imposed more treasury sanctions on trade with Iran, making imports from the country difficult, in the hope such actions would starve Tehran of cash and force it to give up its nuclear program.
The U.S. and EU believe that Iran is developing nuclear weapons under its nuclear program, but Tehran insists its program is for peaceful purposes.
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