MRPL set to seal 250,000T Iran diesel deal

7 May, 2008, 2154 hrs IST, REUTERS

NEW DELHI: Indian refiner MRPL will soon conclude a deal to sell 250,000 tonnes of diesel to Iran over the next eight months, its managing director said on Wednesday, replacing Reliance Industries as a major supplier to the OPEC member.

MRPL sold its first spot cargo to Iran last month as the Iranian National Oil Co sought new suppliers after India's Reliance halted sales. Sources said Reliance's bankers refused to confirm letter of credit raised by Iran's central bank due to increasing Western pressure over Tehran's nuclear programme.

"It is being finalised, in the next couple of days we have to inform them that we have agreed," R Rajamani said. "We will be supplying one parcel each month."

Reuters reported MRPL's talks with Iran a month ago, when one source said the refiner would be able to sidestep the payment problems that Reliance faced by settling its deals through the government-run State Bank of India.

Iran is forced to import motor fuels due to a lack of production from its aging refineries, and this winter bought diesel from as far a field as Singapore after Reliance stopped supplies in the second half of last year.

MRPL annually imports around 120,000 bpd crude from Iran for use at its 194,000 barrels-per-day coastal refinery in the southern Indian state of Karnataka, but Rajamani said its supply agreement would remain separate from the diesel deal.

Although Western pressure has made it more difficult for some companies to finance trade with Iran, Tehran has been able to maintain a steady flow of imports from a host of suppliers by making alternative credit arrangements.