India scrambles for crude as Gulf war hits supplies

NEW DELHI: India is in talks with major global suppliers, including Russia, to compensate for the crude oil shortage caused by the Gulf conflict, a senior oil ministry official said Thursday.

The severe supply challenges reportedly forced state-run refiner Mangalore Refinery and Petrochemicals Ltd (MRPL) to shut a crude processing unit while moving gas companies to levy further curbs on supplies to industries.

The discussions are underway with national oil companies as well as international oil majors and traders for supplying replacement barrels, the official said.


However, India hasn't yet curtailed exports of petrol, diesel, or aviation turbine fuel (ATF), which it ships in large volumes, especially to Europe, as such a move would only add to the prevailing global turmoil, the official said.

Mangalore Refinery and Petrochemicals is facing a shortage of crude as it has become overwhelmingly dependent on Gulf supplies after stopping imports of Russian oil a few months ago. A company executive described the shuttering of the crude processing unit as routine maintenance.

Given the current situation, it is better to use the time for maintenance, he said.

India has lost access to about 60 mmscmd of liquefied natural gas (LNG), accounting for about 60% of national gas imports, following the shutdown of a Qatari LNG plant after an Iranian attack on Monday, the official said.

The supply disruption is affecting several industries but hasn't impacted cooking gas availability for households or for compressed natural gas (CNG) vehicles, said people familiar with the matter.

State-run GAIL had earlier sent supply curtailment advisories to city gas distribution companies but later withdrew them, possibly after government intervention, a person said. However, many industrial customers of GAIL, Indian Oil, BPCL, Gujarat Gas, and Adani Total Gas have been affected by shortages.

Meanwhile, two tankers carrying Russian oil arrived at Gujarat's Vadinar port and Odisha's Paradip port on Thursday, signalling India's efforts at tapping oil from Russia. Oil discharged at Vadinar is used by Rosneft-backed Nayara Energy, while Indian Oil uses crude imported at Paradip. Nayara had continued to import Russian oil, but other refiners had turned cautious following US pressure.

India is also in talks with the US on insurance for tankers in the Gulf region, the ministry official said. US President Donald Trump has ordered the US Development Finance Corporation (DFC) to provide, at a reasonable price, political risk insurance and financial guarantees for ships travelling through the Gulf.

The absence of insurance due to the war is making it doubly difficult for ships, which already want to avoid the barrage of Iranian missiles in the Gulf.

The choking of the Strait of Hormuz and attacks on key energy installations have pushed up oil and gas prices. Benchmark Brent traded around $84 per barrel on Thursday.