(Reuters) – India imported nearly 40 percent less Iranian crude last year, with no sign in the last month of 2013 that the easing of Western sanctions in a landmark deal resulted in Indian refiners bumping up their purchases.
The breakthrough agreement between Tehran and six world powers that was reached on November 24 and took effect earlier this month allowed it to keep oil exports at reduced levels of about 1 million barrels per day (bpd), less than half pre-2012 levels.
But while analysts have expected Iran’s exports to start creeping up as some sanctions are eased, data from its top buyers indicate imports have held steady to lower so far.
Oil industry sources in India have said they expect no rapid increases in the imports in coming months, while noting shipments could fall further in the upcoming fiscal year.
India’s cuts last year due to the toughened sanctions that were put in place in 2012 were deeper even than the targeted cut of 15 percent to 220,000 bpd in average imports from Iran for the year ending March 31, 2014.
And New Delhi could take just 180,00-190,000 bpd in 2014/15 as it may have to cut imports further if sanctions against Iran are not fully lifted later this year, an oil ministry official said earlier in January.
For 2013, India – Iran’s top oil customer after China – imported 195,600 bpd of oil and condensate, down 38 percent compared with 315,200 bpd in 2012, according to data obtained from trade sources.
India’s purchases from Iran declined nearly 14 percent last month compared with November and about 31.5 percent from a year ago, the data also showed.
India’s cut in Iranian oil shipment in 2013 was in sharp contrast to a meagre 2.2 percent decline in China’s imports excluding condensate.
South Korea’s crude purchases from Iran were down about 14 percent in 2013 from the previous year.
China and South Korea also decreased their Iranian oil shipments in December from the same month a year ago by 14.5 percent and 29.5 percent, respectively.
Japan reports its crude import data for December and 2013 on Friday. It cuts its imports from Iran over January-November by 4.6 percent, only by reducing its November intake of the crude by more than half from the same month in 2012.
India cut its Iranian oil imports the deepest of Tehran’s top buyers – which also include China, Japan and South Korea – primarily due to worries about insurance coverage for refineries processing the OPEC member’s crude.
State refiners Mangalore Refinery and Petrochemicals Ltd (MRPL.NS) and Hindustan Petroleum Corp (HPCL.NS) halted purchases from Iran in April after insurers did not extend coverage for processing oil from the sanctions-hit nation.
MRPL resumed purchase in August drawn to Iran’s discount on crude sales and shipping, but HPCL, whose Vizag plant in southern India was twice hit by fire accidents in the year, continued to stay away from processing Iranian oil.
If HPCL had been processing Iranian oil when the fires hit, it would have received no insurance payments for the damage.
India reduced Iran’s importance as a supplier to about 5.1 percent of all imports in 2013, with the country slipping to seventh position in terms of the volume of crude imports compared with fourth a year ago.
To replace Iranian volumes, India imported about 31.2 percent more oil from Latin America in the January-December period, with the region accounting for about 19.1 percent of overall imports, up from about 15.7 percent a year ago.
The Middle East region supplied about 62.3 percent of India’s oil imports in January to December, compared with nearly 64 percent a year ago.
Overall, India imported 3.51 million bpd of oil in December, down 3 percent from a year earlier. Imports for the full year rose nearly 7.8 percent to 3.86 million bpd to fuel expanding refining capacities.
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