Azernews.Az

By Nigar Abbasova

Iran, which suffered a lot due to the economic sanctions imposed by the West, continues to take steps aimed at restoring its energy sphere and gaining back its market share.

The country, which has recently re-entered the world energy market, is now engaged in strengthening its cooperation with other countries.

Iran delivered the first batch of its oil to Indian Mangalore Refinery and Petrochemicals Ltd (MRPL), which will keep it as a reserve in its underground strategic storage. The first batch with 260,000 tons of Iranian crude was received in a very large crude carrier (VLCC), which is considered to be one of the largest operating cargo vessels in the world.

Indian Oil Corporation, the biggest Indian oil company, earlier contracted to take some 5 million tons of crude oil from Iran in 2016-2017. The purchase of crude by one of the world's leading crude importers is expected to boost Iran's oil shipments.

India is building emergency storages in vast underground caverns at three locations located in southern India (Visakhapatnam, Mangalore, Padur) to hold a total of 36.87 million barrels of crude (which is considered to be enough to cover almost two weeks of demand), while main objective is to be secured against energy security risks, as the country imports about 80 percent of its oil needs. The country was earlier in talks with the United Arab Emirates' national oil company but negotiations stalled due to commercial terms.

The Visakhapatnam storage with its capacity of 1.33 million tons was commissioned in June 2015, while the Mangalore storage with its capacity of 1.5 tonns launched reception of oil on October 12. The facility in Padur will be ready by late 2016.

India has been raising oil imports from Iran since January, while Iran's daily crude exports to India surged to the highest level in 15 years in August.

India's oil imports rose by 4.4 percent in September, as compared to the previous month, up to a record high of 4.47 million bpd, as the country expanded its refining capacity to meet growing fuel demand in the scope of expanding economy. The country, which is currently the third-largest consumer behind the U.S. and China, recorded an increase of 17.7 percent in the level of consumption, as compared to the indices of 2015.

Oil market, meanwhile, continues to keep an eye on Iranian export volumes, as pre-sanction levels is a precondition of the country for discussing cuts in production to boost crude prices and oust the problem of oversupply.

Iran has repeatedly stated that it plans to increase oil output up to 4 mbd by March 2017, while Iranian oil exports have nearly doubled since sanctions were lifted in January 2016.

China, India, Japan and South Korea are among big Asian oil consumers that have sharply boosted their imports of Iranian crude this year. Asian markets account for roughly 75% of Iran’s crude oil exports.

The country has the fourth largest oil reserves and largest natural gas reserves in the world, while the country is also the third largest exporter of oil in the world. Crude oil production in the country reached 3.66 million barrels per day in September, according to OPEC.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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