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Page added on September 20, 2016
India set to buy Iran oil for emergency reserves
India is set to buy 6 million barrels of Iranian crude for its strategic oil reserves as negotiations with the United Arab Emirates’ national oil company for supplies are stuck over commercial terms, industry sources said.
Such purchases by the world’s No.3 crude importer would boost Iran’s drive to ramp up its oil shipments as it looks to regain market share following the lifting of sanctions over its disputed nuclear program.
Oil markets have been keenly focused on Iranian export volumes over the last few weeks as they get closer to pre-sanction levels – a milestone that Tehran has said is a precondition for discussing a global output freeze to boost crude prices.
India, seeking to hedge against energy security risks as it imports about 80 percent of its oil needs, is building emergency storage in vast underground caverns to hold a total of 36.87 million barrels of crude, enough to cover almost two weeks of demand.
Three industry sources with direct knowledge of the matter said India would buy 6 million barrels of Iranian Mix crude from the National Iranian Oil Co in October and November to fill half the Mangalore storage facility in the southwestern state of Karnataka. They declined to be identified as they were not authorized to speak with media.
State firm Bharat Petroleum Corp will buy 4 million barrels in two very large crude carriers (VLCCs) and Mangalore Refineries and Petrochemicals Ltd will import 2 million barrels, the three sources said. They did not give pricing details.
“The two refiners decided to buy Iranian Mix as it suits their refineries,” said one of the sources.
The step comes as Iran’s daily crude exports to India surged to the highest level in 15 years in August.
India in 2014 began talks to lease part of its strategic storage to Abu Dhabi National Oil Co (ADNOC). Under such a deal, India would have first rights to the stored crude in case of emergency, while ADNOC would be able to move cargoes to meet any shift in demand.
“Talks have not moved forward with ADNOC despite several rounds of discussion. We (India and the UAE) are stuck on commercial terms,” said one of the sources.
ADNOC, India’s oil ministry, BPCL and MRPL did not immediately respond to requests for comment.
To take advantage of falling oil prices pending the conclusion of a deal with the UAE, India’s oil ministry instructed BPCL and MRPL to select a grade to fill half the Mangalore facility, the sources said. They chose Iranian Mix.
The Indian side last week discussed Iranian oil purchases with Safar Ali Keramati, Deputy Director at National Iranian Oil Company (NIOC) for Crude Marketing and Operations.
“If (Indian customers) come to us for extra barrels, then we will do our best to accommodate their demand,” Keramati told Reuters.
The 9.75 million-barrel Vizag storage facility in east India is being filled with Iraqi Basra oil.
The start of operations at a third facility, at Padur in Karnataka, has been pushed back due to problems in acquiring land to lay a pipeline link to the local port.
16 Comments on "India set to buy Iran oil for emergency reserves"
penury on Tue, 20th Sep 2016 5:57 pm
And a further benefit, India does not need to spend dollars.
shortonoil on Tue, 20th Sep 2016 7:05 pm
Between China and India they are placing about 1% of world production into storage. Now we know where the increase in demand is coming from, which the EIA says is 1.2%. OECD nations are also seeing substantial increases in stockpiles. There is now no increase in organic growth.
Once these reserves are filled, inventories will rise and prices will fall even further:
http://www.thehillsgroup.org/depletion2_022.htm
Just as we have been saying would happen.
Truth Has a Liberal Bias on Tue, 20th Sep 2016 7:48 pm
“Just as we have been saying would happen.”
Good job dumb ass. It’s not exactly rocket science. Now why don’t you go google “price vs cost vs value”. See if you can learn to use the terms appropriately seeing as how your so smart that you’ve constructed a thermodynamic model of the global economy and published it in a report with no references. You ever think of putting that piece of garbage that you call the Etp model up for peer review? And by peer review I don’t mean give Futilitist a free copy as that fucktard claims you did.
makati1 on Tue, 20th Sep 2016 8:26 pm
Truth believes he has the only truth in the world, forget experience or intelligence.
Sissyfuss on Tue, 20th Sep 2016 10:06 pm
“Your so smart”. God, Tooth Byass, I can’t improve on that if I tried.
antaris on Tue, 20th Sep 2016 10:57 pm
THALB ? Where do assholes like you come from?
Born in a cave, ditch or maybe an outhouse. Should have been left there.
Boat on Tue, 20th Sep 2016 11:08 pm
short,
Show us that eia link.
GregT on Wed, 21st Sep 2016 12:18 am
Oil Glut Bomb: New Data Suggests Global Economy Too Weak To Hold Up Oil Prices
“IEA’s Oil Market Report focused on weakening demand growth for oil. Their quarterly data shows that year-over-year demand growth has decreased consistently from 2.3 mmb/day in the third quarter of 2015 to 1.4 mmb/day for the second quarter of 2016 (Figure 1). The forecast for the third quarter is only 1.2 mmb/day.”
“EIA data indicates that maximum consumption growth as a percentage occurred when oil prices were falling into the low-$30 range and that it has weakened as prices increased into the mid- to upper-$40 range. This suggests the global economy is too weak to support oil prices in the current range.”
http://www.forbes.com/sites/arthurberman/2016/09/14/iea-eia-glut-bomb/#d8c361736212
Cloggie on Wed, 21st Sep 2016 9:35 am
6 million barrels? No typo?
That’s what the US consumes in 8 hours.
shortonoil on Wed, 21st Sep 2016 11:23 am
“6 million barrels? No typo?
That’s what the US consumes in 8 hours.”
It’s pretty amazing when one stops to consider that it took 5.7 to 570 million years for it to form in the Earth’s crust.
If this was a horse race the nag would be sitting at the start gate with a broken leg. Petroleum has allowed mankind to go absolutely no where at warp speed.
shortonoil on Wed, 21st Sep 2016 11:41 am
“Good job dumb ass. It’s not exactly rocket science. Now why don’t you go google “price vs cost vs value”.”
Why don’t you take a look at this graph, and let us know what the cost/ value relationship is today.
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/icbkDFACM4iA/v2/-1x-1.png
The industry’s revenue is down $1.87 trillion per year over the last 3 years, and there is no new oil coming on line. It doesn’t look like anyone is going to be doing much E&P at $45.18/ barrel either. Maybe you can Google “going broke at $1.87 trillion per year” and see what you get.
Of course, it you have to Google it, to figure it out, you are probably too dumb to understand it anyway.
rockman on Wed, 21st Sep 2016 1:17 pm
Cloggie – “That’s what the US consumes in 8 hours.” Heck, forget 6 million bbls…how about 700 million bbl? That’s what we have in our SPR. And even that has no bearing on PO. Even that huge volume can only deal with very short term DELIVERY problems.
And forget about India’s oil) going into storage. While someone can try to INFLATE the effect by posting the total or yearly volume when put into the perspective it’s inconsequential when referring to daily global consumption. IOW if it takes 6 months (I suspect longer) the HUGE APPARENT CONSUMPTION increase by India actually represents less the 0.04% of daily global. Calculating the % of daily consumption as though the entire 6 million is being consumed in 24 hours is just silly spin IMHO.
IOW if a country is putting 1% of daily global consumption into long term storage it would be about 340 million bbls. Can you imagine that much being put into any ones SPR quicker then a few years. BTW if India and India are putting 340 million bbls into SPR then China must have announced 334 million bbls going into their SPR. So how much are they sending daily into their SPR:
“In the first quarter of this year China diverted about 787,000 barrels per day into its strategic stockpile, the highest rate since Bloomberg has been tracking the data in 2004. Overall, as of March, China was importing around 7.7 million barrels per day.”
IOW about 0.83% of daily global consumption. If they maintain that rate it would take 14 months to complete the fill. But the current rate is above the average so maybe closer to 1 1/2 year.
But it depends on whether a 1% increase in consumption will have a meaningful negative impact on the current market. But a double edge sword: after the fill the reduction in consumption would have the reciprocal positive effect.
Speaking of SPR’s: “In 2015, Congress authorized the DOE to sell $2 billion worth of oil from the SPR between 2017 and 2020 and use the proceeds to make infrastructure upgrades. The language was an acknowledgement from Congress that the SPR is no longer needed in its current form. The latest DOE report, which came at the behest of Congress, cautions against drawing down the reserve below the 530 million barrel threshold, which would leave the U.S. more vulnerable to price spikes.”
And the 530 million bbl target isn’t arbitrary: it’s very difficult to find in the SPR law but the Dept of Defense has the first call on about 500 million bbls in our SPR. Also don’t forget that by international treaty the US is also obligated to share some of it with those countries.
The logic is that we’ll only need a 60 day supply instead of a 90 day supply if there is an “emergency”. Very comforting to know the govt knows just how bad a future emergency would be. LOL.
makati1 on Wed, 21st Sep 2016 7:52 pm
Perhaps something will happen and that SPR oil will never leave the storage holes? EMP over Kansas anyone?
I recently watched a Time Team episode on youtube where they found a coin hoard, from Roman times, that contained ~55,000 coins. Obviously the owners never lived to reclaim the buried treasure. Shit happens.
rockman on Wed, 21st Sep 2016 9:51 pm
Mak – “Perhaps something will happen and that SPR oil will never leave the storage holes?” Just in case you missed my point: whether or SPR oil is ever produced or not it will have no bearing on the impact of the PO dynamic in the US. Look at the recent history: the SPR oil had no impact on oil prices swinging from $17/bbl to $145/bbl to $38/bbl to $120/bbl to $28/bbl and finally back up to around $45/bbl. All in less the 20 years and not once was any effort made to impact any situation with SPR oil. And for good reason: other the relieving very short term supply disruptions our SPR, even at 700 million bbls (let alone 550 million bbls), will hand no meaning impact on the energy path the US is following.
Some us here know it, the govt knows it and most of the public doesn’t understand it.
makati1 on Wed, 21st Sep 2016 10:19 pm
rockman, I am aware that the SPR is a drop in the world oil bucket. I don’t see the current flood of oily articles of any importance. We do not have that much time left to worry about the price of oil. Maybe it would be best if the whole hydrocarbon infrastructure collapsed tomorrow. It would hurry the collapse into a new and unknown future.
rockman on Thu, 22nd Sep 2016 10:33 am
Mak – “Maybe it would be best if the whole hydrocarbon infrastructure collapsed tomorrow.” As I just explained in detai elsewhere that won’t happen. At least with respect to most older existing PRODUCTION. New drilling and new fields…that’s a very different dynamic as the collapsing rig count indicates. But how did the producers react to the collapse of the rig count, oil prices and new reserves additions? By producing more oil then ever before in history. Obviously depleting the reserve base faster. But it also shows the reserve base exists. And as I posted: the shale production will go away fast. The Deep Water also…just not as fast. But the old fields that deliver much of today’s production? They will also eventually disappear…just not quickly.
That’s the good news. The bad news: it’s unlikely the world will use this “grace period” to seriously address our energy predicament.
But not a problem for the Rockman and Makati: they’ll both assume room temperature long before the situation gets really bad. LOL.