Bharat Petroleum Corp , India's second-biggest state refiner, is seeking a 27% increase in its oil deal with Saudi Arabia for 2012-13 from the previous year to replace a cut in imports from sanctions-hit Iran, industry sources said on Wednesday.
Iran has offered extra oil supplies to Asian buyers as it seeks to retain market share in the face of western sanctions aimed at crippling Tehran's nuclear programme that many say is aimed at producing a bomb. Iran says it wants to produce power.
China, India and Japan are planning cuts of at least 10% in Iranian crude imports as tightening US tightening US sanctions make it difficult for the top Asian buyers to keep doing business with the OPEC producer.
BPCL has approached the world's top oil exporter to lift the size of its term deal for the next fiscal year beginning in April to 152,000 barrels per day (bpd) versus 120,000 bpd this fiscal year, one of the sources said.
Another source confirmed plans to increase the size of the annual crude import deal with Saudi Arabia, and added that the refiner plans to reduce Iranian deal size by about 50% to 10,000 bpd in 2012-13.
One of the sources said there was a government directive to reduce crude imports from Iran by 15%. He refused to comment whether the cut by BPCL would be deeper than 15%.
All the sources have direct knowledge of the matter but cannot be identified as they are not authorised to speak to media.
A BPCL spokesman declined to comment.
BPCL is the third Indian refiner planning to raise import from Saudi Arabia. Earlier Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd raised their term oil import deal with Saudi Aramco for 2012-13.
HPCL has already said it will cut Iran imports by about 15% to 60,000 bpd for its annual contract while private refiner Essar Oil is sticking to 100,000 bpd.
BPCL's crude shipments from Iran in the current fiscal year were restricted due to payment problems after New Delhi scrapped a long-standing clearing house mechanism in December 2010.
India and Iran have agreed to settle 45% of their oil trade using the rupee, which is not freely traded on global markets, as they fear an existing payment conduit through Turkey may succumb to EU sanctions. Turkey is seeking EU membership.
Indian firms have been paying for their crude imports from Iran through Turkey's Halkbank in euros since the middle of 2011. Halkbank has since refused to open an account for BPCL.
India has said it will not abide by unilateral western sanctions, so its response to cut supplies from Iran could indicate the increasing uncertainty of doing business with Iran.
