RIL may not renew Iran crude deal

It is not immediately clear why Reliance is not renewing its annual deal, but it could be due to a price disagreement when the refiner has easy access to competing grades, the report quoted sources as saying. "For 2010 as of now, we don't have a term contract," a National Iranian Oil Company (NIOC) source told Bahrain's Gulf Daily News. "It has nothing to do with the US," he said, adding, the deal had not been renewed due to differences over pricing of Soroush and Nowruz crudes. While the 90,000-100,000 barrels per day (bpd) of Iranian crude Reliance bought last year made up only eight per cent of its purchases and 2.4 per cent of Iran's sales, the move underscores a drift in Asia away from Iranian crude, the report said. Japan's imports in 2010 are set to fall by 11 per cent on year to the lowest in 17 years, the report said, citing high prices for Iranian grades, while China's purchases fell nearly 40 per cent in the first two months of the year. Reliance did not respond to enquiries and Iranian officials declined to comment, the report said. Reliance's sophisticated complex in Jamnagar in western Gujarat state can refine 1.24m bpd of crude as varied as light West African to heavy sour Middle East grades, allowing it to switch to whatever crude is cheapest, it said. "It could be they are not happy with the NIOC's reluctance to drop its prices, especially with more attractive competing grades like Russia's ESPO coming onto the market," a trader told the newspaper. Crude from the ESPO pipeline is gaining favour among refiners in Asia due to its attractive price and quality versus the Gulf's heavier sour grades. ESPO offers Reliance an option.