Small chance of Iraq strife disrupting oil supplies: Ministry

New Delhi : The petroleum ministry foresees very little possibility of a disruption in India’s oil imports due to the on-going violence in Iraq.

“There is no situation as yet for panic, and everything is under control,” an official here told IANS Monday.

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“Crude oil supplies to India come from Iraq’s Basra oilfields which are far from the conflict zone in the northeast of the country. Loading of tankers from the Basra oil terminal is continuing normally,” the official added.

Iraq is India’s second largest crude oil supplier after Saudi Arabia, supplying about 25 million tonnes (MT) in 2013-14, to meet over 13 percent of India’s oil needs. Saudi Arabia was the largest supplier with around 38 MT.

For the current year, state-run oil marketing companies (OMCs) planned to import 19.4 MT, of which 18.7 MT was for Indian Oil Corp. (IOC) and Hindustan Petroleum (HPCL).

“These two companies have already lifted 50 percent of the contracted quantity,” the official said.

The ministry has, however, asked OMCs to prepare a contingency plan to meet any supply disruptions from Iraq, by exploring other suppliers in the Middle East and elsewhere.

The official pointed out that while there was some rise in oil prices immediately after violence broke out in Iraq, the subsequent fall in international market rates like for Brent crude and West Texas Intermediate, indicated that the disturbed situation in Iraq may not affect India’s oil imports.

The ministry’s Petroleum Planning and Analysis Cell Monday reported that the international crude oil price of the Indian basket went down to $110.42 per barrel on the last trading day Friday from Thursday’s price of $110.66 per barrel.

Market analysts predict an impact on prices if the conflict in Iraq continues and supplies from south Iraq are disrupted.

If crude prices increase further or sustain at elevated levels for the rest of the current fiscal, the fall in gross under-recovery (or losses that OMCs incur on selling petroleum products below cost) from Rs.139,869 crore in 2013-14 to the projected Rs.91,665 crore for 2014-15 may not take place, said ratings agency ICRA in a report.