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Refineries in India are importing oil from more varied sources in order to diversify supply

Indian refineries continue to reduce imports from traditional markets like Saudi Arabia and Iran and have stepped up purchasing from other markets, including Mexico, Iraq and Venezuela while building inventories as crude prices remain low. Availability of cheaper crude variants and softening of shipping costs have encouraged Indian refiners to import from new sources in order to diversify the country’s portfolio, reports Economic Times.

India has been cutting imports from Iran in particular as it seeks to stay in line with international sanctions. Imports from Iran were almost at an 18 month low in February.

“Indian companies are increasingly importing from Mexico and Venezuela. The cost of transporting from these countries is higher than from the Middle East, but they are able to buy cheaper heavy crude,” said Nitin Tiwari, Vice President of Institutional Research for Religare Capital Markets.

In 2013, India was the fourth-largest consumer and net importer of crude oil and petroleum products in the world after the United States, China and Japan, according to the Energy Information Administration (EIA). India’s petroleum product demand reached nearly 3.7 MMBOPD, far more than the country’s total liquids production of roughly 1.0 MMBOPD.

India

The change in imports is helping the country diversify its oil imports, which has been largely dependent on Saudi Arabia in the past. Industry officials said while the share of imports from the Middle East would change, given the higher imports from other countries, the volume imported from OPEC as a whole may not fall drastically.

While the companies do not share their import data, Thomson Reuter’s data, which is based on tanker arrivals, revealed a significant drop in imports from Iran which is facing sanctions. According to Reuters’ data, India bought about 102 MBOPD of crude and condensate from Iran in February, down 63% from January and 62% from a year ago. Essar Oil, which was the biggest importer of oil from Iran, shipped in 38.5% less in January and is expected to reduce it further.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.