Reliance Industries, owner of the world's biggest refining complex, is preparing to buy oil from Iran next month after a gap of about five years, said an industry source with knowledge of talks between the two.
The Indian conglomerate stopped Iranian oil imports in 2010 because it was worried that the threat of US sanctions on companies doing business with the Islamic Republic would complicate its efforts to boost market share for its fuels in the United States, Reuters reported.
Now with an end this year to the western sanctions that had halved Iran's oil exports to about 1 million barrels per day, Tehran is trying to recoup lost market share and Reliance is keen to get Iranian barrels back into its crude diet.
Officials from India's biggest private refiner recently visited Iran to chalk out the details for resumption of trade ties with Tehran, the source said, and to begin with, National Iranian Oil Company will supply a million spot barrels each of condensate and crude oil to Reliance in a single cargo.
The shipment will make Reliance Iran's first new Indian oil customer since the lifting of the sanctions.
Reliance is also talking to NIOC for a term deal to buy 100,000-120,000 bpd of oil, the same level it used to buy before sanctions hit its imports.
"Finalization of the volumes depends on the grades that Reliance wants," the source said. Reliance is planning to lift the spot cargo in the first week of March, although there could be some delays, the source added.
Iranian oil, mainly heavy, sour grades accounted for about 8% of Reliance's overall imports in 2009.
"It looks like most of Iran's output, except for the light oil grades known as condensate, judging from how much is held in storage, has already been fully committed," said Ehsan Ul-Haq, senior analyst at London-based consultancy KBC Energy Economics.
Reliance may also restart refined fuel shipments to Iran that were stopped in 2007.
"Iran still needs gasoline and Reliance is in a good position to supply that," Haq said. "Iran will be more than willing to get gasoline from Reliance as its own refineries cannot produce enough to meet demand."
