India will try to buy more Iran oil, Moily tells Ghasemi

Petroleum ministers of India and Iran at a meeting on Monday decided to continue bilateral cooperation in oil exploration and trade.

India's oil minister M Veerappa Moily told his Iranian counterpart Rostam Ghasemi, at a meeting in New Delhi that India would continue to buy Iranian oil, and would also encourage its refiners to increase their purchases from Iran as soon as the US-imposed embargo is eased.

Iran on its part offered oilfields to Indian explorers. Ghasemi also expressed keenness to route an undersea gas pipeline to avoid Pakistan; and insurance to refiners.

India has reduced its crude purchase from Iran to 13 million tonnes in 2012-13 from 18 million tonne in the previous year, largely forced by US and EU sanctions on Iranian oil in retaliation to Tehran's supposed nuclear weapons programme. The embargo has blocked international payment channels.

Iranian oil imports are reportedly expected to fall further this year to 11 million tonnes, with imports down to a trickle, as Mangalore Refinery and Petrochemicals Ltd, which bought 3.9 million tonnes of Iranian crude in 2012-13, not importing even a single shipload so far this financial year.

Indian Oil Corp and Essar Oil Ltd have bought just 0.5 million tonnes and 0.75 million tones, respectively, since April. Other buyers like Hindustan Petroleum Corp and Hindustan Mittal Energy Ltd have yet to order a cargo.

Insurance companies, unable to get backup or reinsurance cover from European counterparts, have refused to provide cover to refineries using oil from Iran.

"The Indian side explained that it would encourage companies to maintain their engagement in terms of crude oil purchase, taking into account their requirements, based on commercial and international considerations," said a government statement.

Significantly, Ghasemi agreed to consider shifting a proposed production sharing contract for the Farzad-B gas field from the current ONGC Videsh-led consortium to another nominee of the Indian government.

Farzad-B holds 13 trillion cubic feet of recoverable gas - three times the size of known reserves in Reliance Industries' KG-D6 block. If government-run Oil & Natural Gas Corp-led consortium were to invest in its development, it would be barred from doing business with the West.