Mangalore Refineries to sell diesel to Iran as Reliance halts supplies

09 May 2008

State-run refiner Mangalore Refineries and Petrochemicals Ltd has struck a deal with Iran to supply around 250,000 tonnes of diesel to Iran at a premium of about $4.40 to Middle East Gulf quotes.

Under the agreement, MRPL will sell one 30,000-tonne cargo every month till December this year to Neftiran Intertrade Company, a fully owned subsidiary of the National Iranian Oil Co (NIOC), MRPL managing director R Rajamani said.

MRPL sold its first spot cargo to Iran last month as the Iranian National Oil Co sought new suppliers after Reliance halted sales to the OPEC member.

Sources said Reliance's bankers refused to confirm letter of credit raised by Iran's central bank due to increasing Western pressure.

Rajamani said Iran would now use a 30-day open credit line settled in euros, as against the earlier policy of asking buyers to open letters of credit for purchases.

Iran, forced to import auto fuels due to a lack of production from its aging refineries, had this winter also bought diesel from Singapore after Reliance stopped supplies in the second half of last year.