India supplies at least a third of Iran's gas oil import requirements. India's Mangalore Refineries and Petrochemicals Ltd was expected to drop its term deal to supply gas oil to Iran due to a difference over price, an industry source said.
The two sides differed over the premium MRPL wanted to charge Iran for cargoes above benchmark Middle East prices. "When MRPL struck the earlier deal (with Iran), it got a premium of $4.35 a tonne, but now Iran is not willing to pay that much," the source said.
In May, MRPL sealed a deal with Iran to export 240,000 tonnes up to December, and in August almost doubled the size of the deal. MRPL declined to comment on the deal but confirmed it had no plans to ship gas oil to Iran in January. MRPL said it was in talks with more than one national oil company for gas oil supply.
MRPL was in advanced talks to sell supply to Iran's Gulf neighbour the United Arab Emirates. The expected loss of the gas oil supply import contract with MRPL could have prompted Iran's move to agree to a short term deal with Singapore trader Hin Leong, traders said. Hin Leong declined to comment on the deal. Iran's state-owned National Iranian Oil Company (NIOC) could not be immediately reached for comment.