Mangalore Refinery and Petrochemicals Ltd (MRPL) has said that the sanction on Iran (a major crude supplier) is an immediate threat to profitability.

MRPL annual report for 2018-19 said that the company is reliant on imports to meet a major portion of its crude oil requirement. West Asia is the principal source of crude to MRPL with more than 65 per cent of the requirement being sourced through term contracts.

“The recent sanctions on Iran and the expiry of sanctions-waiver available to India imposes both a supply and price risk on your company,” it said.

Alternative source

While the reduction in supplies of crude from Iran will have an impact on prices globally, MRPL has lined up alternative sources to mitigate the impact of supply restrictions, it said. The company has also taken steps to diversify the crude mix. It has processed three new crudes – Basra Heavy from Iraq, Urals from Russia, and Nagyalanka, a domestic crude from Krishna basin, in 2018-19.

It said that the company procured 16.31 million tonnes of crude oil during 2018-19. Of this, 12.27 mt was imported and the balance was sourced indigenously from Bombay High, Ravva and Mangala from ONGC and Cairn India.

Import of crude oil was from National Iranian Oil Company (5.52 mt), Saudi Aramco (4.28 mt), Kuwait Petroleum Corporation (0.686 mt), ADNOC-Abu Dhabi (1.07 mt) and SOMO-Iraq (0.267 mt). MRPL also imported crude oil (1.321 mt) through spot tender during the year.

On Friday, MRPL stock closed at ₹59.60 on the BSE, down 1.32 per cent against the previous close.

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