Coal News We love to talk!
Russia may snatch away Iran's key customers of crude oil in India as Rosneft ties up long-term supply pacts with Indian refiners that would help secure an attractive market for Russia at a time producers are fiercely competing in the face of excess supply.
Rosneft has entered into preliminary agreement with Oil and Natural Gas Corporation ( ONGC ) to explore supplying long-term crude oil and feedstock to the latter's refinery. ONGC's unit Mangalore Refinery and Petrochemical Ltd (MRPL) manages a 15 million tonne refinery in southern India.
Rosneft has another agreement with Essar Oil to supply 10 million tonne per annum (mtpa) of crude oil and feedstock to its refinery in Gujarat, India's second largest with a capacity of 20 mtpa. The supply is expected to begin this year.
Interestingly, in beginning to supply crude to these refineries, Russia may end up replacing much of Iranian supply to India as both Essar and MRPL have been heavy mporters of crude from the West Asian nation. Essar and MRPL accounted for about 90% of the 10 million tonne of crude oil India imported from Iran in 2015.
India—Iran's biggest client after China— is an attractive destination for oil producers as its ever growing energy needs and lower domestic production mean it has to import 80% of its crude oil requirement. "With these deals going through, Russia would secure a market for its crude oil and that would naturally be detrimental for for the competition," said Gaurav Moda, a consultant with KPMG.
Another oil sector analyst said Iran can overcome the impact in the medium term since it is aggressively seeking markets in India and elsewhere. After the lifting of sanctions, Iran has been determined to raise output and has refused to ally with other major producers to freeze output to stabilise prices.
Some analysts, however, are sceptical of the impact on Iran. "I see little impact on Iranian crude oil, which is nearby. Russian crude oil may be arbitraged from time to time on economic terms but is not a regular trading pattern as of now," said Johannes Benigni, chairman of JBC Energy, a consultancy.
An executive at a state refiner also underlined the long distance between Russia and India making the supply uneconomical, but added that a swapping of Russian crude with the West Asian supply could actually work for Indian refiners. "The freight between the two countries make it very expensive. So, it would happen only if the government forces MRPL to do so. Or, they could do a swap," he said.
- DB Power close to commissioning Unit-2 (600 MW) of its Chattisgarh project Read more
- Delhi gencos supply power to discom at Rs 7.12 per unit Read more
- Delhi govt FIR on KG gas price illegal: SG Read more
- Indian Oil planning Rs 20,000-crore petrochem complex in Odisha Read more
- Mahan-1 unit of Essar Power goes on stream Read more
- ONGC to buy into Adani-Welspuns oil block off Mumbai coast Read more
- Pooled prices, subsidies to revive gas-based power Read more
- Ahead of Rs 1 lakh-cr bids, pressure to end Power Grids perks Read more
- Falling oil prices to make green power unattractive Read more
- ONGC gets partners’ nod for $5-b Kashagan stake buy Read more