* Officials see problem insuring refineries using Iran's oil
* Aims at a 33 pct jump in Iraq oil imports in 2013/14
* HPCL's insurance policy due in June
By Nidhi Verma
NEW DELHI, Feb 12 (Reuters) - India's Hindustan Petroleum
Corp may have to halt Iranian oil imports from June
because western sanctions could mean its refineries cannot renew
insurance to process the crude, officials said on Tuesday.
It plans to lift more crude from Iraq to make up for the
loss of Iranian barrels in the contract year which starts on
April 1, 2013.
European Union and U.S. sanctions aimed at forcing Iran to
curb its nuclear programme, which the West believes is aimed at
making a bomb, have more than halved Iran's oil exports in 2012.
Iran says its nuclear programme is for civilian use.
Any cut in HPCL's Iran oil imports would be in line with a
broader goal set by India, the world's fourth-largest oil
importer and Iran's second-biggest client after China, to reduce
deliveries from Tehran. A tough new U.S. condition on funding
such purchases has been imposed.
State-run HPCL will lift up to 46,000 barrels per day (bpd)
from Iran in the year ending March 31, HPCL's head of refineries
K. Murali said, under a contract for 40,000 bpd with an option
for another 20,000 bpd.
Murali said HPCL would take up to three cargoes totalling
three million barrels from Tehran during April and May.
HPCL, Iran's third-biggest Indian oil client, may not be
able to get insurers to renew cover if it processes Iranian oil
in its two refineries when renewal comes up in June.
Indian insurers do not fall directly under the sanctions but
depend on the Western reinsurance market to hedge their risk.
"It is not only an economic valuation. There are other
factors also, like insurance, and once we get clarity then we
will be able to decide whether we will be able to take Iranian
crude or not," said Murali.
Indian insurers have told fellow state-run refiner MRPL
that they will only fully cover its facility to handle
larger crude vessels if it gives an undertaking not to use the
single point mooring for vessels carrying Iranian crude.
HPCL aims to have a contract to import only token volumes
from Iran in the year that starts in April, because of the
growing concerns about insurance, a source privy to HPCL's crude
import plan had told Reuters earlier in the day.
"Volumes from Iran depend on the impact of sanctions. If
sanctions are eased or if the government helps on the insurance
issue, then Iran imports may go up. But at this moment no one
wants to take the risk," this source, who is not authorised to
speak to the media, said.
To make up for a cut in Iranian oil purchases, HPCL wants to
increase its annual deal with Iraq's State Oil Marketing
Organisation (SOMO) to about 60,000 bpd in the year starting in
April from 45,000 bpd in the current year, the source added.
HPCL may buy some Iraqi Basrah crude volumes through
stakeholders other than SOMO, the source added.
ALTERNATIVE SUPPLY SOURCES
Indian refiners have been compensating for lost Iranian
volumes with crude from Iraq and Latin America. Iraq replaced
Iran as the country's No. 2 supplier after Saudi Arabia in the
year that ended in March 2012, as Tehran ceded a position it had
held for five years.
Sanctions on Tehran have also prompted its other major Asian
clients - China, Japan and South Korea - to cut imports and
secure a waiver which allows them continued access to the U.S.
Refiners are already finding it difficult to import because
of an EU ban on insuring vessels carrying Iranian oil. Moreover,
under new U.S. sanctions from Feb. 6, payments for Iranian crude
must be held in a bank account in India in rupees, which are not
freely traded on international markets.
India is aiming to cut deliveries from Tehran by 10-15
percent in the year beginning in April after reductions of about
15 percent in the current year.
Indian refiners, both private and state-run, have already
cut imports by about 19 percent in April-December 2012 to around
HPCL operates the 166,000 bpd Vizag refinery in southern
India and a 130,000 bpd plant in western Maharashtra state.