Iran has ended free shipping of crude oil to India and has asked refiners like Mangalore Refineries (MRPl) and Essar Oil to arrange for freight, Oil Minister Dharmendra Pradhan said on Wednesday.
Iran had in November 2013 offered free delivery of crude oil to Indian refiners as tough Western sanctions crippled its exports. With shipping lines refusing to transport Iranian crude for fear of being sanctioned, Iran used its shipping line for the delivery and did not charge for transportation.
“From April 2016, NIOC has informed oil-importing companies like MRPl and Essar Oil that the future delivery would be based on Free on Board (FOB) basis and the freight has to be arranged by the buyer,” Pradhan said in a written reply to a question in the Rajya Sabha. FOB is a trade term requiring the seller to deliver goods on board a vessel arranged by the buyer.
During the last two-and-a-half years, Iran sold Indian refiners crude oil on cost, insurance and freight (CIF) basis. CIF is a trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination.
Pradhan said the National Iranian Oil Company (NIOC), however, has agreed to provide vessels and insurance till such time Indian companies are able to arrange the same. Iran came out of western sanctions in January and has since then made several changes in the way it trades its vast oil.