Iran-India oil row may hurt MRPL's profitability: ICRA

The India-Iran oil payments row could hit Mangalore Refinery and Petrochemicals' profitability if the dispute continues beyond a month, ICRA, the local unit of ratings agency Moody's, said on Monday.

The Reserve Bank of India said last month that oil trade payments to Iran could no longer be settled using a long-standing clearinghouse system run by the central banks. The dispute has not yet been resolved. "If the issue remains unresolved beyond a month, MRPL's refining throughput could be impacted as it tries to find alternative sources to replace crude oil imported from Iran under term contracts," ICRA said. The rating agency said the dispute between India and Iran would have minimal impact for Indian Oil Corp and Chennai Petroleum Corp as Iranian crude makes up hardly 3%-4% of the two refiners' total crude throughput. MRPL imports 152,000 barrels per day (BPD), or around 60% of its total oil needs, from Iran ICRA said, adding the refiner would have smooth operation in January as it maintained crude oil inventory of roughly a month. Besides MRPL's profitability, cash generation could also be impacted due to differences in grade and pricing of crude oil imported from Iran and alternative sources, ICRA said in a statement. MRPL's working capital needs might increase as it would get a credit period of about 30 days if it imported crude from alternative sources instead of 90 days for purchases from Iran, the ratings agency said. MRPL on Monday issued a crude import tender after a gap of nearly six months. MRPL, a subsidiary of state-run explorer Oil and Natural Gas Corp, runs a 236,400-bpd coastal refinery in Karnataka.