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China and India stockpile growth absorbing oil surplus, say experts

Tuesday, October 1st, 2013

A surfer rides a wave with an oil drilling rig in the background in Huntington Beach, California, USA 29 September 2013. (EPA/MICHAEL NELSON)

A surfer rides a wave with an oil drilling rig in the background in Huntington Beach, California, USA 29 September 2013. (EPA/MICHAEL NELSON)


Written by : Shuja Al-Baqmi
on : Tuesday, 1 Oct, 2013
Saudi Arabia still well-placed in international oil market, with domestic demand set to drop
Riyadh, Asharq Al-Awsat—Surplus global oil production is being bought up by India and China, say experts, as part of an effort by the two states to bolster their stockpiles.Experts say that the strategic oil reserves of China and India have recently increased, and are expected to continue to grow in the future. China’s oil reserves are expected to rise to 150 million barrels by the end of the current year, while India’s reserves are currently at 50 million barrels of oil.

Speaking to Asharq Al-Awsat, the experts said the supply surplus in the international oil market had reached 900,000 barrels a day and that “this surplus was being purchased by some of the major countries to add to their reserves, including China and India.”

Energy affairs expert, Ni’mat Abu Al-Souf, told Asharq Al-Awsat that a strategy of building reserves was being implemented by some of the world’s major net oil consumers, regardless of cost.

He said “the strategy to increase the reserves is to confront market fluctuations or the reduction in supply, amid high consumption in these countries.”

Abu Al-Souf added that “China produces around four million barrels of oil daily while it consumes 10 million barrels per day, therefore, it needs to be prepared for any interruption or reduction in supply.”

Meanwhile, Saudi Arabia’s efforts to decrease domestic oil consumption are expected to bear fruit in the near future.

Abu Al-Souf said “Saudi Arabia has started taking effective measures to reduce domestic energy consumption by relying on gas. Current consumption ranges between 2.8 and 3 million barrels per day.”

He predicted that the benefits of the programs to reduce energy consumption in Saudi Arabia will start to show within two years.

Meanwhile, economics expert Faisal Al-Iqab said the increase in the strategic reserve of some countries was aimed at protecting their markets from world market fluctuations or reductions in supply. He said “amid the geopolitical crises in the region, especially in Libya, Iran, and Syria, countries which have high consumption rates try to take precautionary measures by increasing their strategic reserves.”

Meanwhile, Abdelwahab Al-Sa’adoun, Secretary-General of the Gulf Petrochemicals and Chemicals Association (GPCA) said “the economic development in some countries has an important impact on the volume of international demand for oil. This is what is taking place in China, one of the largest world markets in terms of demand for oil, which largely relies on Saudi oil in particular, and Gulf oil in general.”

He added that a drop in the rate of economic growth in China in the final months of 2012 reduced demand. In turn, this prompted Saudi Arabia to reduce its production by around 700,000 barrels per day, to reach the current level of 9 million barrels per day.

Al-Sa’adoun added that Saudi Arabia was still playing a balancing role in the international oil market. He said: “Saudi Arabia has smart policies, through which, balance can be maintained in world markets, and which gives markets and investors confidence in its policies.”

Al-Sa’adoun said despite the increase in domestic production in the United States, American imports still stood at around 8 million barrels per day. He added that Saudi Arabia was able to reach a level of oil production of 12.5 million barrels per day, should the world markets need it.

Rupee’s Plunge Prompts Refiner to Embrace Iran: Corporate India

Tuesday, September 3rd, 2013


By Debjit Chakraborty & Rakteem Katakey - Sep 3, 2013 4:40 AM PT

Mangalore Refinery

An undated company handout image shows a Mangalore Refinery & Petrochemicals Ltd. facility in Mangalore, India. Source: Mangalore Refinery & Petrochemicals Ltd. via Bloomberg

India is increasing imports of crude oil from Iran as policy makers risk flouting U.S. trade sanctions in their scramble to halt the slump in the rupee.

Mangalore Refinery & Petrochemicals Ltd. (MRPL), India’s biggest buyer of Iranian crude, plans to buy five cargoes of 85,000 metric tons each this month, compared with three in August, Managing Director P.P. Upadhya said in an interview. Shipments from the world’s only producer that accepts rupee payments for oil are estimated to rise to 4 million tons in the year ending March 31, versus 3.9 million tons in the previous 12 months.

India is among a few countries eligible for a waiver of a U.S. law that imposes financial sanctions unless they can show they have “significantly reduced” purchases from the Persian Gulf country. Prime Minister Manmohan Singh is seeking options to revive the $1.8 trillion economy, which relies on imports to meet 80 percent of its energy needs, as he struggles to stem capital outflows that have weakened the rupee by 19 percent this year against the dollar.

“Importing crude oil from Iran is crucial as it helps in curbing dollar outgo in a big way,” Upadhya said by phone from Mangalore on India’s west coast. “We can make part payment in rupees. That’s the arrangement.”

Atomic Research

The U.S. and European Union are seeking to curb trade in Iranian oil, arguing the Persian Gulf state’s atomic research is aimed at producing weapons. The government in Tehran says it is for civilian purposes. Asian customers of Iran, including China, India and South Korea, won waivers from the U.S. allowing imports of Iranian crude as they were able to show purchases had been curbed.

While India has abided by several rounds of United Nations sanctions on Iran over the country’s nuclear program, it has publicly criticized unilateral American sanctions as an infringement on its sovereignty. Finance Minister Palaniappan Chidambaram told reporters last month that India is considering stepping up imports without breaching UN rules.

Indian refiners buying Iranian crude deposit at least 45 percent of their payments in rupees into a bank account, former junior oil minister R.P.N. Singh said in August last year. Iran in return paid for imports of commodities including rice from India in rupees. The nations also briefly traded in euros after the Reserve Bank of India dismantled a mechanism used to settle payments in dollars in December 2010.

Currency Benefit

“Buying more crude from Iran is positive for Indian refiners like Mangalore Refinery due to currency benefit and lower freight cost,” said Kamlesh Kotak, head of research at Asian Markets Securities Pvt. Ltd. “This would be a short term benefit, and the government needs a structured policy to handle the current-account deficit better.”

South Korea imported 815,447 tons of Iranian crude in July, 38 percent higher than a year earlier, Korea Customs Service said on its website Aug. 15. China’s imports in the month fell 13 percent to 1.69 million tons, according to data from General Administration of Customs in Beijing.

Curbs on buyers have made Iran the sixth-biggest producer in the Organization of Petroleum Exporting Countries, dropping from the No. 2 position. The nation has the capacity to produce 3.5 million barrels per day, almost equivalent to India’s total import requirement. Output rose 0.4 percent in August to 2.57 million barrels a day from the previous month.

Halted Purchases

Mangalore Refinery and Hindustan Petroleum Corp. (HPCL), the nation’s third-biggest state refiner, and Chennai Petroleum Corp. (MRL) halted crude purchases from Iran in April after Indian insurers declined coverage. India’s government is preparing a 20 billion-rupee insurance fund for future purchases, Financial Services Secretary Rajiv Takru said Aug. 19.

“If the government wants us to import Iran crude, we can do so, since we have processed this crude in the past,” A.S. Basu, managing director at Chennai Petroleum, a unit of Indian Oil Corp., said in a Sept. 2 phone interview. “How much volume we might actually take this year will depend on what price is being offered.”

Iran’s Naftiran Intertrade Co. owns 15.4 percent of Chennai Petroleum, making it the second-biggest holder, according to data compiled by Bloomberg.

In the absence of Iranian oil, refiners would need to buy crude from the spot market which is typically more expensive. Mangalore Refinery reported a loss of 4.5 billion rupees ($68 million) in the three months ended June 30, its third consecutive quarter of losses. Raw material costs rose 6.8 percent to 144.1 billion rupees compared with a year earlier.

Shares Drop

Mangalore Refinery’s dropped 1.4 percent to 30.90 rupees in Mumbai trading today. The stock has dropped 49 percent this year, heading for its worst annual performance since 2008. Chennai Petroleum has slumped 57 percent since January and Hindustan Petroleum has slid 43 percent, compared with a 6.1 percent decline in the benchmark S&P BSE Sensex (SENSEX) index.

Oil imports have contributed to India’s widening current-account deficit, which in turn is undermining efforts to revive economic growth from its slowest pace in a decade. Gross domestic product rose 5 percent in the year to March 31, the smallest gain since 2003, while the rupee plunged to an all-time low of 68.845 a dollar on Aug. 28.

India imported about 7.2 percent of its crude from Iran in the past fiscal year, down from about 11 percent in the previous 12-month period, according to the oil ministry.

“If India is able to adjust oil imports from Iran against exports using the Indian currency, it will squeeze our dollar demand significantly,” said Chokkalingam G., the chief investment officer at Centrum Wealth Management Ltd. in Mumbai, which manages the equivalent of about $290 million in Indian stocks. “It will make a big difference to India’s exchange rate management and at the same time push up export of commodities.”

Iran oil minister orders energy contract overhaul

Sunday, September 1st, 2013
Posted by : Asharq Al-Awsat
on : Sunday, 1 Sep, 2013
Iranian oil minister Bijan Zanganeh speaks during a news conference at the oil ministry in Tehran in this March 8, 2005, file photo. (REUTERS/Raheb Homavandi/Files)Iranian oil minister Bijan Zanganeh speaks during a news conference at the oil ministry in Tehran in this March 8, 2005, file photo. (REUTERS/Raheb Homavandi/Files)

Considers move to more production-sharing contracts to attract more foreign investors, according to the oil ministry’s news service
Dubai, Reuters—Iran’s new oil minister has ordered the revision of energy project contracts to make them more attractive to foreign investors, a National Iranian Oil Company (NIOC) executive told oil ministry news service Shana.Iran’s long insistence on paying contractors with oil made projects unattractive to foreign investors long before Western sanctions made it almost impossible to work in the isolated Islamic republic.

Tehran began offering more attractive production-sharing contracts (PSCs) to some Indian companies earlier this year in the hope they would help revive its decaying energy sector.

Oil minister Bijan Zanganeh has ordered a wider review of Iran’s oil contracts because the buy-back deals are particularly unsuitable for the enhanced oil recovery projects NIOC needs to attract investors to revive its ageing oil fields.

“The petroleum minister has issued a specific order for following up on reforming the structure of oil contracts in the country in order to invite all well-known domestic and foreign oil companies for maximizing national interests,” NIOC’s planning director, Abdol-Mohammad Delparish, said.

“Currently, production-sharing agreements are not the priority in the petroleum industry and the focus is on other types of contracts like buy-back,” Shana quoted him as saying.

Delparish said Iranian oil officials were consulting with foreign industry experts about how to make the contracts more attractive for foreign investors.

Under Iran’s buy-back system, contractors are supposed to be paid in oil and gas from projects they develop with their own capital but then have to hand back the project to Iranian companies when completed and wait to be paid.

This system has kept oil majors like Italy’s ENI waiting for multi-million dollar payments for projects they completed decades ago, while sanctions make it still more difficult to get the oil from Iran.

Asia’s Iran oil imports drop slightly in July

Friday, August 30th, 2013

Iran’s top Asian oil clients slightly reduced imports from the sanction-hit nation in July and purchases remain down about a fifth for the year. (File photo: Reuters)

Friday, 30 August 2013

Osamu Tsukimori, Reuters

Iran’s top four oil clients slightly reduced imports from the sanction-hit nation in July and purchases remain down about a fifth for the year, as the United States keeps pressuring buyers to take less and less of the crude.

Asia may start to feel pinched, however, from the already deep cuts in the Iranian imports as the supply outlook for some of the alternative grades worsens. Asian refiners need to ramp up runs to meet peak winter demand and further cuts in shipments from Iran could increase input costs.

Crude premiums in Asia are already at multi-month highs, slashing the profit from processing a barrel of crude into fuels nearly two-thirds from a month earlier. Buyers are also on edge, worried a strike against Syria could disrupt supplies from key Middle Eastern exporters and boost prices even higher.

Oil shipments from Iran have more than halved from pre-sanction levels as the U.S. and EU sanctions have made it difficult to insure tankers carrying the crude. The measures have also forced refiners to find new ways to pay Tehran, because it is cut off from international banking networks.

Iran’s clients have had to switch to other suppliers such as nearby Iraq and the United Arab Emirates.

“It’s also an opportunity for Saudi Arabia to push back its output to 10 million bpd as they’ve always shown that they are willing to step up production,” said Alex Yap, FGE analyst in Singapore.

China and other major Asian buyers of Iranian crude have to continue curbing purchases to win waivers to U.S. sanctions aimed at ending the country’s disputed nuclear program.

The U.S. House of Representatives in July easily passed a bill that is the first to spell out exactly how much Iran’s oil exports should be cut, setting a goal of reducing the shipments by another 1 million bpd to near zero.

The bill has to be approved by the U.S. Senate and signed by President Barack Obama before becoming law.

In July, the four major Asian buyers imported 796,047barrels per day (bpd) of Iranian crude in July, down from798, 400 bpd a year ago, according to official government data and tanker arrival schedules given to Reuters.

Between January and July, they imported 936,981 bpd, down 20percent from the same seven months in 2012.

Japan, the last of the four to report its oil imports for July, imported 172,047 bpd of Iranian crude last month, data from the Ministry of Economy, Trade and Industry (METI) showed on Friday. Its imports fell 10 percent from a year ago to183, 914 bpd for the January to July period.

Japan’s Iran imports rose last month from zero the previous July, marking a third-straight month of year-on-year gains.

Japan imported no Iranian oil in July 2012 for the first time since 1981 as Iran’s No.3 oil buyer reined in its appetite to keep from falling afoul of European Union sanctions targeting shipping insurance coverage.

Industry sources had expected Japan could continue raising imports to offset steep cuts made in April due to uncertainties over the continuation of sovereign insurance on tankers carrying Iranian oil.

Last month, China and India cut their imports by 12.6percent and 82.4 percent, respectively, while South Korea raised imports by 38.7 percent.

Replacement oil for the lost Iranian barrels has come from Iraq, Oman, United Arab Emirates, Latin America and Africa.

Japan needs to win its fourth six-month waiver from U.S. sanctions next month as part of a review process by unveiling plans to accelerate cuts in Iranian oil purchases. The waivers for the other Asian buyers will come up in November-December.

APNewsBreak: US: Iran Can’t Access Much Oil Income

Friday, August 30th, 2013

ABC News

WASHINGTON August 30, 2013 (AP)

By MARJORIE OLSTER Associated Press

The U.S. has concluded that nearly half of Iran’s monthly earnings from crude oil exports are accumulating in accounts overseas because of sanctions that restrict Tehran’s access to the money.

The estimates, provided to The Associated Press by a senior U.S. official and never released before, are the latest indication that new sanctions imposed in February are deepening Iran’s economic distress and making it increasingly difficult to access billions of dollars in vital oil revenues. The official spoke on condition of anonymity because of the sensitivity of sanctions policy.

The U.S. hopes the pressure will force Iran to compromise on its nuclear program, which the West suspects is aimed at making a weapon. Iran insists it is for peaceful purposes only and has not budged on demands to halt uranium enrichment, a process that can be used to make fuel for energy production or for a nuclear weapon.

The U.S. estimates that about $1.5 billion in crude oil revenues is piling up in restricted foreign accounts every month. Crude revenues overall averaged about $3.4 billion monthly in the first half of year, according to the assessment.

That means Iran is not able to either spend or repatriate about 44 percent of its crude oil income.

The February sanctions, which dealt one of the harshest blows to the Iranian economy in recent times, aimed at cutting off access to oil revenues. The sanctions require an already reduced pool of oil importers to pay into locked bank accounts that Iran may access only to purchase non-sanctioned goods in that country or humanitarian supplies.

If importers do not comply, they face the threat of being shut out of the U.S. financial system. The U.S. has granted sanctions exemptions to China, India and seven other countries to import Iranian oil. Only six are currently importing oil, according to the government.

The U.S. reached the estimates by looking at Iran’s trade imbalances with oil importers based on customs data from each of the relevant countries. The figures show Iran cannot spend the full amount it earns because it is limited to buying only non-sanctioned goods for imports from the small pool of trading partners. And it is not able to repatriate the money to fill its foreign reserve coffers or cover any budget shortfalls.

Garbis Iradian of the Institute of International Finance, an economic think tank, noted that despite wave after wave of sanctions, Iran continues to run a trade surplus. But that surplus has been shrinking steadily since 2011. The assets piling up abroad could render most of that remaining surplus essentially unusable.

“This is a major development,” Iradian said. “If they don’t have access to this, it is an additional burden, and if that continues on they will feel the pain,” he added. “It seems the sanctions intensified with this accessibility issue.”

Iradian, the deputy director of the IIF’s Africa and Middle East Department, said Iran’s total trade surplus has fallen from about $70 billion in 2011 to about $44 billion in 2012. The IIF estimates it will reach about $38 billion by the end of this year. And with $1.5 billion a month accumulating in restricted accounts, some $15 billion of the $38 billion surplus may be out of reach.

“This brings down their trade surplus to almost zero,” said Iradian. “That is quite severe. … They are entering a dangerous zone.”

Read full story: US: Iran Can’t Access Much Oil Income

Oil minister cancels oil and gas deals with China

Tuesday, August 27th, 2013


Mon, 08/26/2013

Iran’s new oil minister, Bijan Zanganeh, has annulled the country’s largest agreement with Chinese interests regarding the Southern Pars Oil and Gas Development project and transferred the $5-million deal to two Iranian companies, National Oil and Petropars.

Mehr News Agency reports that a second agreement with the Chinese for the 11th phase of the development has also been annulled and transferred to Petropars.

This is one of the new minister’s first moves since he took the helm of the oil ministry this month.

Iran’s oil and energy industry is facing serious difficulties in view of the international sanctions on Iran`s petroleum products, with oil output reduced by a million barrels a day.

The report indicates that while the Chinese oil companies have a good track record in neighbouring countries, in Iran they have missed several deadlines and caused months and even years of delays.

Iran Oil Minister Vows to Revive Output as He Eyes Price War

Friday, August 23rd, 2013


By Kambiz Foroohar - Aug 22, 2013 4:05 AM PT

Bijan Namdar-Zanganeh is on a mission to make up for the last eight years.

In his first few days as oil minister in President Hassan Rohani’s new government in Tehran, the 61-year-old initiated plans to revive oil production to pre-2005 levels, hinted at a price war to win old customers and brought back managers sidelined by the previous administration.

“Revival of Iran’s lost oil markets is among my top priorities,” Zanganeh told the Fars News agency this week. “We only ask those who have replaced us in the world’s oil markets to know that when we are reentering these markets they will have to accept that oil prices decline or they should reduce their production to create enough space for Iran’s oil.”

Iran, historically the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, has slipped to sixth place. Sanctions imposed by the U.S. and its allies against Iran over the past year to curb its nuclear program have restricted the country’s oil exports. That came on top of years of falling output due to underinvestment.

Iran now has to increase its oil and gas exports to revive the economy, which is suffering from inflation topping 35 percent and unemployment of about 12 percent. Even with sanctions, oil revenue accounts for as much as 80 percent of Iran’s export earnings, according to the World Bank.

“The oil industry is Iran’s Achilles heel,” said Alireza Nader, a senior analyst in Arlington, Virginia, at Rand Corp., a 65-year-old research group. “Iran’s economy is in a crisis.”

Pumping Oil

Rohani, 64, is examining budget projections made by the previous administration of Mahmoud Ahmadinejad. Zanganeh, who won parliamentary confirmation last week, vowed to return oil production to 4.2 million barrels a day. The current level is 2.56 million barrels, according to data compiled by Bloomberg. Saudi Arabia’s daily output is 9.65 million barrels.

Brent crude for October settlement was 1 cent lower at $109.80 a barrel on the London-based ICE Futures Europe exchange at noon local time. It’s fallen 1.2 percent this year.

U.S. and European Union sanctions cut Iran’s exports by about a million barrels a day as part of a broader effort to press the country to halt its uranium enrichment activities. Western powers suspect the program is part of a plan to produce nuclear weapons, something Iran denies.

Iran has the world’s fourth-largest oil reserves, with 157 billion proven barrels, and its biggest gas reserves, estimated at some 1,187 trillion cubic feet.

Aging Industry

Getting them out is another matter, while even keeping the status quo will be a challenge.

The energy industry is showing signs of distress regardless of the sanctions. Without substantial upgrades in facilities, production at Iran’s core fields, several of which date from the 1920s, could go into a precipitous decline. Some of Iran’s biggest oil fields face output drops of as much as 13 percent, according to the U.S. Energy Information Administration.

“Turning around the petroleum sector is crucial to Iran’s economy and Rohani’s success,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting & Project Management. “Zanganeh has a lot of managerial experience and can help keep production steady.”

With his dark suits and collarless white shirts, Zanganeh was a regular figure at OPEC when he ran the oil ministry in the government before Ahmadinejad won power in 2005.

Shell, Total

Starting in 1997, he brought in Western companies to revive Iran’s oil and gas fields, mainly through buy-back deals, in which foreign companies were paid in the form of crude oil. Iran attracted $15 billion for projects during Zanganeh’s first tenure from companies including Royal Dutch Shell Plc (RDSA)Italy’s ENI SpA (ENI)France’s Total SA (FP), and Norway’s Statoil ASA. (STL)

Born in 1952, Zanganeh, a civil engineer by training, is used to walking Iran’s corridors of power, holding ministerial posts for more than 22 years. Before taking over the oil portfolio, he was minister of energy for nine years, from 1988 to 1997, and spent five years in charge of agriculture.

Ahmadinejad replaced Zanganeh, who was then appointed to the Expediency Council, an advisory body to the Supreme Leader, Ayatollah Ali Khamenei.

In turn, Ahmadinejad brought in his allies and appointed four different oil minsters during his eight years as president. In 2011, he named Rostam Qasemi, head of Khatam Anbia, the Revolutionary Guards’ engineering arm, to replace Massoud Mir-Kazemi, another Guards commander.

“One of Zanganeh’s challenges is that Ahmadinejad fired 250 experienced managers and replaced them with less qualified allies,” said Sara Vakhshouri, a former adviser to the director of National Iranian Oil Co. International, the foreign trading division of Iran’s state oil company. “Priority is now to get those managers back and ramp up production.”

India’s Iran oil imports drop 75% in July

Thursday, August 22nd, 2013

The cut in Essar Oil's Iran volumes were likely due to New Delhi's delay in extending approvals for Iranian insurers covering shipments into India.

The cut in Essar Oil’s Iran volumes were likely due to New Delhi’s delay in extending approvals for Iranian insurers covering shipments into India.

By Reuters | 22 Aug, 2013


NEW DELHI: India’s imports of Iranian crude plunged by three quarters in July from June, tanker arrival data obtained by Reuters showed, as the country’s only active importer in the past two months curbed buying.

The cut in Essar Oil’s Iran volumes were likely due to New Delhi’s delay in extending approvals for Iranian insurers covering shipments into India, a trade source said.

Indian imports of Iranian crude are expected to rise from August, however, with refiner Mangalore Refinery and Petrochemicals Ltdresuming shipments after a gap of four months because of a separate insurance issue.

MRPL’s return as a buyer could give some relieve to Iran, which has seen its exports more than halved by sanctions imposed in 2012 by the United States and the European Union, costing Tehran billions of dollars a month in lost oil revenue.

India on July 17 granted a three-month approval to Iranian shipping underwriters Kish P&I Club and Moallem Insurance Co with effect from June 28, the date of lapse.

Essar Oil has declined to comment on whether the issue over the shipping insurers resulted in its lower imports for July or if the resolution means its imports would rebound in August.

Essar Oil imported 35,500 barrels per day (bpd) of oil from Iran in July, compared with 140,800 bpd in June, tanker arrival data made available to Reuters shows.

The cuts dropped India’s Iranian oil imports 82 per cent from 201,900 bpd in the same month a year ago, when state-backed refiners were also taking shipments.

Iran dropped in July to 15th place on the list of India’s crude suppliers for the month, down from eighth place in June and fourth for all of 2012.

The US and EU sanctions placed on Iran over its nuclear programme have reduced its oil exports more than half from pre-sanction levels of about 2.2 million bpd.

In the first half of 2013, imports of Iranian oil from its four biggest buyers – China, India, Japan and South Korea - fell more than a fifth from a year ago to around 960,000 bpd.

MRPL, which used to be Iran’s top Indian client, and Hindustan Petroleum Corp Ltd halted Iranian oil imports in April due to difficulties in getting insurance for refineries processing Iranian oil. That forced New Delhi to look at providing its own reinsurance after European firms backed out over sanctions.

MRPL has already started taking Iran oil again, while HPCLBSE 3.43 % has said it wants more adequate coverage for refineries running the sanctions-hit crude.

The Indian government also wants to boost imports from Tehran to prop up the rupee, which fell past 65 to the dollar to a record low on Thursday.

The US and European Union sanctions have pushed Tehran into accepting payment in rupees for some of its oil, and higher volumes could support the currency.

“Within the UN sanctions and fully complying with the sanctions, there may be more space for imports from Iran,” Finance Minister P. Chidambaram said earlier this month.

Overall in the first seven months of this year India’s imports from Iran have declined 46 per cent from the same period last year to about 185,700 bpd, the trade data showed.

India imported nearly 58 per cent more oil from Latin America in the January to July period as its Iranian shipments dropped.

Overall, Asia’s third-largest economy shipped in 14.1 per cent more oil in July than a year ago, while imports for the January-July period rose about 10.3 per cent, the data showed.

Mangalore Refinery Resumes Iran Oil Buying as Insurance Sought

Tuesday, August 20th, 2013


By Debjit Chakraborty, Siddhartha Singh & Rakteem Katakey - Aug 20, 2013 3:40 AM PT

Mangalore Refinery & Petrochemicals Ltd. (MRPL) purchased its first cargo of Iranian crude since April as India prepared a 20 billion-rupee ($314 million) insurance fund to cover future imports.

The refiner, India’s biggest buyer of Iranian crude, received about 85,000 metric tons on Aug. 17, Managing Director P.P. Upadhya said in a phone interview today from Mangalore. The company has ordered three more shipments of a similar size, he said, without stating delivery schedules.

“This is the first cargo we’ve got from Iran this financial year and we’ll see how many more we can import in the rest of the year,” Upadhya said. “The same ship has returned to Iran and will bring the additional cargoes.”

The purchase follows comments from Finance Minister Palaniappan Chidambaram on Aug. 12 that India plans to import crude from Iran without breaching United Nations sanctions. The U.S. and European Union are seeking to curb global trade with the Persian Gulf nation to halt its nuclear program, which they say is aimed at producing weapons. Iran says the program is for civilian purposes.

India is planning the insurance fund to cover refiners buying crude from Iran, according to Financial Services Secretary Rajiv Takru. It will be managed by General Insurance Co. and an initial amount of 5 billion rupees will be offered soon, he said in an interview yesterday.

Local Insurers

Mangalore Refinery, a unit of Oil & Natural Gas Corp., India’s largest oil explorer, and Hindustan Petroleum Corp. (HPCL), the nation’s third-biggest state-refiner, halted crude purchases from Iran in April after Indian insurers declined to cover refineries that process the oil.

“We’ve haven’t started imports from Iran and we won’t until the insurance issue is fully resolved,” said B.K. Namdeo, the director for refineries at Hindustan Petroleum in Mumbai. The company hasn’t bought any of the 1 million tons, or 20,000 barrels a day, it planned to import this year, he said. It purchased 2.2 million tons in the year ended March 31.

Mangalore Refinery’s shares rose 5 percent to 28.55 rupees, the biggest gain since June 28, at the close of trading in Mumbai today. The benchmark S&P BSE Sensex index slid 0.3 percent.

Iran’s Asian customers, including China and South Korea, have won waivers from the U.S. allowing imports of Iranian crude because they were able to show purchases had been curbed. While India has abided by several rounds of UN sanctions on Iran, it has criticized unilateral American penalties as an infringement on the Persian Gulf nation’s sovereignty.

India Economy

India imports about 80 percent of its oil, swelling the country’s current-account deficit, which in turn is hurting efforts to revive economic growth from its slowest pace in a decade and weakening the rupee. The currency is the worst performer in the Asia-Pacific region this year, according to data compiled by Bloomberg.

India imported about 7.2 percent of its crude from Iran in the past fiscal year, down from about 11 percent in the previous 12-month period, according to the oil ministry.

Iran has dropped to sixth place, from second a year ago, among the largest oil producers in the Organization of Petroleum Exporting Countries. It pumped 2.56 million barrels a day last month, according to data compiled by Bloomberg.

Iran: We Continue to Bypass Sanctions and Embargoes

Saturday, August 17th, 2013

Claims $1.8 trillion in oil reserves


BY: Adam Kredo

Hassan Rowhani / AP

Hassan Rowhani / AP

The head of Iran’s national oil company admitted on Friday that Iran has systematically bypassed and avoided Western economic sanctions on its oil exports, according to state run media reports.

Ahmad Qalebani, the managing director of the National Iranian Oil Company (NIOC), recently “underlined that the Iranian nation will bypass embargoes and problems,” according to the state-run Fars News Agency, which reported that Iranian oil reserves “stand at approximately $1.8 trillion.”

“Iran has been able to post a record in terms of the value of its oil discoveries despite the pressure from economic sanctions,” Qalebani was quoted as saying.

The House overwhelmingly voted last month to tighten economic sanctions on Tehran following the appointment of new Iranian President Hassan Rowhani, who has expressed support for the regime’s disputed nuclear program.

U.S. lawmakers warn that current sanctions have failed to impact Iran’s ruling regime, a point underscored by Qalebani’s most recent comments.

With more than $1.8 trillion in reserves and a global oil market hungry for cheap crude, Iran believes that it can easily continue to ship and sell its product.

“I should emphasize that the value of Iran’s exports of oil, condensates and oil products is higher than the figures envisaged in the budget bill,” Mohammad Ali Khatibi, Iran’s Organization of the Petroleum Exporting Countries (OPEC) Governor, was quoted as saying earlier this month by Fars.

He emphasized the “ineffectiveness of the US-led sanctions against Tehran, and said Iran’s crude export has exceeded the figures envisioned in the country’s budget bill,” according to Fars.

“Iran remains the second largest oil producer of OPEC right behind Saudi Arabia,” Iran’s oil minister was quoted as saying during a conference earlier this month.

“We do not confirm a fall in Iran’s oil production and this is quite untrue,” Oil Minister Rostam Qassemi claimed.

The $1.8 trillion in reserves “has been calculated based on the current oil and gas prices,” according to Qalebani.

U.S. officials have begun to take an increasingly critical view of Rowhani, who was once dubbed a “moderate.

Rowhani has already appointed many controversial officials into his cabinet, including a general who has been tied to the 1983 bombing of a Marine barracks in Lebanon.

Rowhani’s pick for oil minister, Bijan Namdar Zanganeh, has already called on officials “to close ranks and take united action to neutralize western sanctions on Iran’s energy sector.”

Former Pentagon advisor Michael Rubin said that U.S. officials should be paying attention to these officials.

“It’s important to take Iranian officials at their word,” said Rubin, a former Pentagon advisor on Iran and Iraq. “When [former President Ali] Rafsanjani suggested that an Iranian nuclear first strike on Israel might not be a bad idea, he meant exactly that.”

“When Iranian leaders declared their intent to wipe Israel off the face of the earth in both Farsi and English speeches, they meant exactly that,” Rubin said. “When Revolutionary Guard commanders say they seek to force Americans to flee beaten and humiliated, they mean just that. And when regime officials say sanctions aren’t having much of an impact, they are also speaking the truth. Perhaps it’s time to put the crippling in crippling sanctions.”

Watchdog groups have presented a mounting body of evidence that implicates several European companies in Iranian oil shipping schemes.

One Swedish shipping company was caught making multiple stops at several Iranian oil ports that are connected with the country’s military.

Rowhani, meanwhile, recently appointed former Foreign Minister Ali Akbar Salehi as the next head of Iran’s Atomic Energy Organization (AEOI).

Salehi, who worked under former Iranian President Mahmoud Ahmadinejad, has claimed in the past that Iran is the “main victim” of terrorism.

India May Import More Iran Oil Within UN Rules, Chidambaram Says

Tuesday, August 13th, 2013


By Andrew MacAskill - Aug 12, 2013 9:11 PM PT

India would like to import more oil from Iran without breaching United Nations sanctions, the finance minister said, signaling a possible reversal of a policy that saw purchases decline under pressure from the U.S.

Palaniappan Chidambaram in a speech before parliament yesterday said the country is considering the step without giving further details as he announced measures to support the rupee and narrow a record current-account deficit.

“Within UN sanctions and fully compliant with UN sanctions there may be more space for imports from Iran, so that will give us some savings in dollars,” Chidambaram said.

While India has abided by several rounds of UN sanctions on Iran over the country’s nuclear program, it has publicly criticized unilateral American sanctions as an infringement on its sovereignty.

The U.S. and European Union are seeking to curb trade in Iranian oil, arguing the Persian Gulf state’s atomic research is aimed at producing weapons. The government in Tehran says it is for civilian purposes. Asian customers of Iran, including China, India and South Korea, won waivers from the U.S. allowing imports of Iranian crude as they were able to show purchases had been curbed.

India imports about 80 percent of its oil, pushing up the country’s current-account deficit which in turn is hurting efforts to revive economic growth from a decade low and adding pressure on the rupee to depreciate. The currency is the worst performing in Asia this year after the Japanese yen.

India imported about 7.2 percent of its oil from Iran in the last fiscal year, down from 10.5 percent in the prior 12 months, according to the oil ministry.

Iran’s Zanganeh Plans to Boost Oil Output If Made New Minister

Sunday, August 11th, 2013


By Ladane Nasseri - Aug 11, 2013 3:01 AM PT

Bijan Namdar Zanganeh, a former Iranian oil minister who has been nominated by President Hassan Rohani to take over the ministry again, pledged to boost Iran’s oil output should he be approved by the parliament.

“My first action will be to bring the country’s oil production capacity back to 2005” levels, Zanganeh was quoted as telling Shana, the Oil Ministry’s news website. At that time Iran wasn’t subject to United Nations, U.S. and European Union sanctions against its nuclear program. The measures, imposed during ex-president Mahmoud Ahmadinejad’s time in office, have restricted international companies’ ties with Iran and the country’s crude exports.

Rohani, who was inaugurated this month to succeed Ahmadinejad, has pledged to work toward easing sanctions. Parliament is set to review the qualifications of his proposed ministers this week.

Iran, once the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, has slipped to sixth place, producing 2.56 million barrels a day in July, according to data compiled by Bloomberg. The country produced about 4 million barrels a day in 2005, according to Bloomberg.

“I don’t mean output should be immediately returned to its past level because it may not be possible due to sanctions,” Zanganeh said. “But stable production capacity should be created so that we will be able under any circumstances to benefit from oil for our domestic needs.”

Zanganeh served as oil minister from 1997-2005 and prior to that was energy minister for nine years, Shana said.

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