NEW DELHI, Feb 22, (Agencies): India’s Bharat Petroleum has turned to Saudi Arabia, the world’s top oil exporter, for higher supplies in 2012/13, fearing global sanctions may jeopardise trade with Iran, industry sources said on Wednesday. Saudi Arabia is the biggest oil supplier to India, the world’s fourth-biggest oil consumer, and is the only oil producer with significant spare capacity to replace any fall in supply from its regional rival Iran. Iran has offered extra oil supplies to Asian buyers as it seeks to retain market share in the face of western sanctions aimed at stopping Tehran using its nuclear programme to develop weapons. Iran denies it has such an ambition.

Sanctions
While India has said it will not implement the sanctions, it, along with China and Japan, are planning cuts of at least 10 percent in Iranian crude imports as US measures make it difficult for the top Asian buyers to keep doing business with the OPEC producer.
BPCL, India’s second-biggest state refiner, is the third Indian company after Hindustan Petroleum and Mangalore Refinery and Petrochemicals Ltd to seek higher volumes under term deals from Saudi Arabia.
It is seeking a 27 percent increase to 152,000 barrels per day (bpd) in its oil deal with Saudi Arabia for 2012/13 from the previous year, one of the sources said.
BPCL is seeking higher volumes for its plants at Mumbai and Kochi, this source said. The company plans to continue buying 70,000 bpd for its Bina refinery in central India operated by Bharat Refinery Ltd (BORL), a joint venture of Bharat Petroleum and Oman Oil Co.

Reduce
Another source confirmed plans to increase the size of the annual crude import deal with Saudi Arabia, and added that the refiner planned to reduce the Iranian deal size by about 50 percent 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 percent. He declined to say whether the cut by BPCL would be deeper than 15 percent.
All the sources have direct knowledge of the matter but asked not to be identified as they were not authorised to speak to the media.
A BPCL spokesman declined to comment.
King Abdullah of Saudi Arabia offered additional barrels to India earlier this month after Oil Minister Ali al-Naimi said Riyadh could increase production by about 2 million barrels per day (bpd) almost immediately.

In July last year, Saudi Arabia supplied an extra 3 million barrels to Indian customers in August, stepping into the vacuum created by Iran after it cut supply to New Delhi after a long-standing clearing house mechanism was scrapped in December 2010.
India’s HPCL has already said it will cut Iranian imports by about 15 percent to 60,000 bpd for its annual contract, while private refiner Essar Oil is sticking to 100,000 bpd.
India and Iran have agreed to settle 45 percent of their oil trade using the rupee, which is not freely traded on global markets, as they fear an existing payment conduit through Turkey might succumb to EU sanctions. Turkey is seeking EU membership.
Indian firms have been paying in euros for their crude imports from Iran through Turkey’s Halkbank since the middle of 2011. Halkbank has since refused to open an account for BPCL.

Captivity
BPCL Mumbai plant in western Indian has a capacity to process a 240,000-bpd oil, while Southern Kochi plant can process 190,000 bpd oil. It also has a majority stake in a 60,000 bpd refinery in northeast India.
Elsewhere, Sri Lanka is looking for alternatives to Iranian crude oil in the face of US-led sanctions aimed at spurring Tehran to abandon its nuclear programme, Colombo’s petroleum minister said Wednesday. Susil Premajayantha said Sri Lanka imported 92 percent of its crude oil needs from Iran, but was now looking at alternatives.
“We have begun looking for alternative sources of crude and the possibility of increasing the import of Saudi Arabian crude,” Premajayantha told parliament.
He said Sri Lanka’s refinery, built with Italian technology in 1968, could handle Iranian or Saudi light crude and talks were underway to get more Saudi oil, as well as increase refined petroleum product imports from elsewhere.
India has said it will continue to import oil from Iran, joining China in refusing to bow to intensifying US pressure not to do business with the Islamic republic.
The West fears Iran is trying to build a nuclear bomb.
Tehran insists its nuclear programme is only for civilian use and refuses to abandon its uranium enrichment activities, ramping up its programme in the wake of recent Western economic sanctions against its finance and all-important oil sectors.