Iraq topples Iran, becomes 2nd largest crude oil supplier to India

Discussion in 'Foreign Relations' started by ejazr, May 7, 2012.

  1. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

    Oct 8, 2009
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    Hyderabad and Sydney
    Business Line : Industry & Economy News : Iraq topples Iran, becomes 2nd largest crude oil supplier to India


    New Delhi, May 6:

    The pressure of US sanctions on Iran is evident with Indian refiners shifting attention to other crude oil producing nations. Though India has been maintaining that it is not reducing imports from Iran, the import numbers for 2011-12 tell a different story.

    Supplies from Iraq and Kuwait have seen a significant increase, even as Saudi Arabia maintained its position as the largest supplier. Till now, Iran was India's second-biggest crude oil supplier after Saudi Arabia, meeting about 12 per cent of the country's needs, but the position has been taken over by Iraq.

    Domestic refiners such as Hindustan Petroleum Corporation, Mangalore Refinery and Petrochemicals Ltd and Essar Oil are expected to cut sourcing from Iran by at least 10 per cent. Bharat Petroleum Corporation has already stopped sourcing.

    According to industry observers, Iraq has emerged as the next major supplier as two big domestic refiners — Indian Oil Corporation and Reliance Industries — source their crude oil from there.

    Sourcing from Iran may see a further drop after June, unless there is a diplomatic intervention. India is hosting the US Secretary of State, Ms Hillary Clinton, starting Sunday (in Kolkata) followed by two days in New Delhi, sources said.

    Indian refiners imported 171.41 million tonnes of crude oil in 2011-12. Of this, 32.63 mt came from Saudi Arabia, 24.51 million tonnes from Iraq, 17.67 mt from Kuwait, and 15.79 mt from UAE (14.706 mt in 2010-11).
    Payment woes

    The sanctions also made payments for supplies from Iran difficult. A third-country payment mechanism was worked out. Indian refiners paid for their Iranian oil imports through Turkey's Halkbank. But, there is a fear that this system may collapse because of the new US sanctions.

    A method was also worked out wherein National Iranian Oil Company would accept a share of the payments in rupees in an account opened in UCO Bank. However, the 40 per cent withholding tax component made the mechanism a non-starter. Domestic refiners had refused to shoulder the additional tax burden, which made sourcing from Iran very expensive.
    Tax exemption

    In the Budget for 2012-13, the Government stepped in to exempt tax on payment received by a foreign company in Indian currency on account of sale of crude oil to any person in India.

    However, certain conditions would have to be met before benefiting from the tax exemption.
  3. trackwhack

    trackwhack Tihar Jail Banned

    Jul 20, 2011
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    Wow, whats interesting is a 15% increase in overall imports. If we add the additional crude that came from the Rajasthan wells, thats an 18% increase in consumption. Could this mean one of two things?

    1) Actual growth is deflated due to currency pressures
    2) Our strategic oil reserves are coming online and getting filled up.
  4. bhramos

    bhramos Elite Member Elite Member

    Mar 21, 2009
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    wow thats a great news.... but govt is not planing any deviation to reduced over dependence on imports... hope to see more derivatives to choose for good and greener future... like bio petrol, solar....
    hope to Modiji as future PM... and make India as Gujarat... greener..

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