HPCL has announced that it will begin importing crude from Iran when the coverage issue is resolved.
The State owned Hindustan Petroleum Corp Ltd (HPCL) has made insurance news headlines by announcing that it will begin importing one million tons of Iranian crude during this fiscal year, provided that the coverage issues for processing that company’s oil are resolved.
This will represent a contract that is only half of what it was last year, but it is far more than the current standstill.
HPCL, like a number of other refiners in India, has not purchased any crude from Iran following the insurance news that there would not be any insurers or reinsurers willing to provide coverage for refineries that were processing Iranian oil. This made the risk of operation far too high for them to proceed as the sanctions from the West continued on to place pressure on Tehran regarding their controversial nuclear program.
The insurance news has, until recently, looked as though it would not be possible for India to resume imports.
The country has been struggling considerably as the standstill faced by the refiners as a result of the insurance news has caused its currency’s value to plummet. Therefore, they have resumed efforts between their own government and Iran’s in order to reinstate a part of the crude imports to allow the refineries to begin producing once again.
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According to an insurance news statement from the HPCL director of refineries, B. K. Namdeo, “Last year, we had a contract to import 2 million ton on firm basis and another 1 million ton of optional imports (from Iran). We imported 2.1 million ton. This year, we have an optional contract to import 1 million ton.” He went on to add that they have spoken with the finance ministry in order to obtain clarifications regarding the coverage that they could receive. He concluded that “If issues are resolved, we are willing to buy Iranian oil.”
The director of finance at HPCL, K. V. Rao, further explained this insurance news by saying that his company, as well as Bharat Petroleum Corp. Ltd., and Indian Oil Corp. have received approval from the RBI to be able to accumulate $4 billion in foreign currency loans in order to be able to meet their capital requirements.