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One of the biggest Iranian oil customers among India’s refiners, Nayara Energy—formerly known as Essar Oil—started scaling back oil purchases from Iran this month, Reuters reported on Monday, citing sources familiar with the issue.
Nayara Energy has just re-branded after a consortium of investors, including Russia’s largest oil producer Rosneft, oil trader Trafigura, and UCP investment group, finalized a deal to take over Essar Oil in the summer of 2017.
According to shipping and industry sources data provided to Reuters, Nayara Energy usually buys around 6 million barrels of Iranian oil per month.
“Nayara will be lifting about 40-50 percent less than the average volumes, limiting its intake of Iranian oil to about 3-4 million barrels in a month,” one of the sources told Reuters.
The Indian refiner expects that it would continue to buy Iranian oil in the near future, but it is already looking to have a Plan B for sourcing oil from other suppliers, if it’s unable to keep current import levels from Iran because of the returning U.S. sanctions, Nayara’s chief executive B Anand told S&P Global Platts in an interview published in early June.
“Yes, with international shareholders you have to be far more cognizant of the sanctions, the ramifications of the sanctions and we would like to remain sanctions compliant. So whatever is allowed and available within that basket and directions we get, we will focus on that,” Anand told Platts.
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Nayara is not the first Indian refiner that is said to be planning or already starting to cut oil imports from Iran.
Another big Indian refiner, Reliance Industries, which owns the world’s largest refining hub and has significant exposure to the U.S. financial system, plans to stop importing oil from Iran in October or November, Reuters reported last month, quoting two sources with knowledge of the matter.
Reliance Industries is a conglomerate and deals with banks with huge exposure to the United States, where it also operates subsidiaries, including in the oil business. The Indian company’s plans to halt crude oil imports from Iran signal that buyers in Asia could be forced to cut or stop imports from Tehran, due to concerns that they may come under secondary U.S. sanctions.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.