World's Biggest Refinery Mulls Reviving Iran Trade

World's Biggest Refinery Mulls Reviving Iran TradeWorld's Biggest Refinery Mulls Reviving Iran Trade

Reliance Industries Ltd., operator of the world’s biggest oil-refinery complex, will reestablish trading ties with Iran once sanctions are eased following the nation’s nuclear accord with world powers.

“Clearly it has opened up opportunities on both sides, meaning it’s also for sourcing, it’s also for products,” Joint Chief Financial Officer V. Srikanth said at a briefing in Mumbai after the company’s first-quarter earnings on Friday, Bloomberg reported.

Lifting of curbs will allow Reliance to restart gasoline sales after a gap of six years to the Persian Gulf nation, which faces fuel shortage. Access to Iran will also help the company, controlled by billionaire Mukesh Ambani, curtail freight costs currently incurred to ship to markets as far as Europe and the US.

"Reliance was a big supplier of gasoline to Iran prior to sanctions and it will be the obvious candidate to boost supplies into Iran once restrictions end," said Tushar Tarun Bansal, a senior oil consultant at FGE.

Reliance, among a handful of global refiners with the ability to process low-grade crude into high-value products and switch between fuels depending on market prices, is gaining from crude’s slump. The company reported on Friday its highest quarterly profit in seven and a half years, as lower crude costs boosted earnings from fuel sales. The refining margin was the highest in six years because of “strong gasoline cracks led by robust demand growth, lower energy cost and favorable crude differentials”, the company said. The company, which runs two refineries with a combined capacity of 1.24 million barrels a day in the western state of Gujarat, processed 16.6 million tons of crude with an average utilization rate of 107% in the quarter.

Western powers tightened restrictions on petroleum trade with Iran in mid-2010, which scared off many of Iran's gasoline suppliers. Gasoline was nevertheless imported from little-known, smaller trading companies based in Asia, the UAE and the Persian Gulf region with specifications matching Iran's gasoline requirements.