Iran may lose biggest oil buyer in India to Russia’s Rosneft
Essar Oil Ltd., Iran’s biggest oil buyer in India, is getting ready to lower import purchases from the Persian Gulf nation once a new supply deal kicks in with Rosneft.
The Russian state producer is set to buy a stake in the Indian company, according to Lalit Kumar Gupta, Essar Oil’s chief executive officer. The refiner is not planning to import any crude under the agreement this year and it’s undecided which country or project Rosneft will source the crude from, he said.
“When they are on board we will see how much to buy, what to buy” from Rosneft, Gupta said in an interview. The company will buy less from Iran when the supplies begin, he said.
In the first six months of this year, Essar bought more than 148,000 barrels a day from Iran, accounting for more than 40% of the country’s purchases from the Persian Gulf nation, according to shipping data obtained by Bloomberg. The company gets about one-third of the crude it needs for its 20 million-tons-a-year refinery from Iran, Gupta said.
Iran’s efforts to hold on to its expanded market share in Asia, particularly in India where the International Energy Agency expects demand growth in the decades ahead to outstrip all other nations, is complicated by rising supply under the Rosneft deal.
Iranian shipments to India increased 63% in the first half of the year after international sanctions that restricted its supplies were eased in January.
Iran was India’s fourth-biggest supplier in the April-June period, with nearly 403,000 barrels a day, trailing Iraq, Saudi Arabia and Venezuela. India isn’t a regular buyer of Russian crude, with supplies during the quarter at about 8,000 barrels a day.
Rosneft signed a 10-year crude-supply deal with Essar Oil in July 2015 as well as a non-binding pact to buy a 49% stake in the company, which is controlled by India’s billionaire Ruia brothers. As part of the deal, the Russian producer will supply 10 million metric tons of crude a year, or about 200,000 barrels a day, for Essar’s Vadinar refinery in the western state of Gujarat. It never specified where the crude would be sourced from.