New Delhi warns refiners to prepare for ‘drastic cut’ in oil imports from Iran

Saudi Arabia has pledged a “supply boost” as countries work to find a replacement for Iranian oil. (Shutterstock)
Updated 05 August 2018
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New Delhi warns refiners to prepare for ‘drastic cut’ in oil imports from Iran

  • India is the second biggest buyer of Iranian oil, after China
  • The US has said it wants Iranian oil buyers to halt imports from November

NEW DELHI: India’s oil ministry has asked refiners to prepare for a “drastic reduction or zero” imports of Iranian oil from November, two industry sources said, the first sign that New Delhi is responding to a push by the US to cut trade ties with Iran. India has said it does not recognize unilateral restrictions imposed by the US, and instead follows UN sanctions. But the industry sources said India, the biggest buyer of Iranian oil after China, will be forced to take action to protect its exposure to the US financial system.

India’s oil ministry held a meeting with refiners on Thursday, urging them to scout for alternatives to Iranian oil, the sources said.

“(India) has asked refiners to be prepared for any eventuality, since the situation is still evolving. There could be drastic reduction or there could be no import at all,” said one of the sources.

During the previous round of sanctions, India was one of the few countries that continued to buy Iranian oil, although it had to reduce imports as shipping, insurance and banking channels were choked due to the European and US sanctions.

The source said this time the situation is different. “You have India, China and Europe on one side, and US on the other... At this moment we really don’t know what to do, but at the same time we have to prepare ourselves to face any eventuality.”

While a State Department official has said that Washington wants Iranian oil buyers to halt imports from November, US Ambassador to the United Nations Nikki Haley has told Indian Prime Minister Narendra Modi to lessen dependence on Iranian oil.

Haley, currently in New Delhi, spoke with US Secretary of State Mike Pompeo early on Wednesday, before meeting Modi. The US push to curb countries’ imports of Iranian oil comes after President Donald Trump withdrew from a 2015 deal between Iran and six world powers, and ordered a reimposition of sanctions on Tehran.

Under pressure from the US sanctions, Reliance Industries Ltd, the operator of the world’s biggest refining complex, has decided to halt imports.

Nayara Energy, an Indian company promoted by Russian oil major Rosneft, is also preparing to halt Iranian oil imports from November after a communication from the government, a second source said. The company has already started cutting its oil imports from this month.

Indian Oil Corp, Mangalore Refineries and Petrochemicals Ltd. and Nayara Energy, the top three Indian buyers of Iranian oil, and the oil ministry did not respond to Reuters’s request for comments.

Removing Iranian oil from the global market by November as called for by the US, is impossible, an Iranian oil official told the semi-official Tasnim news agency on Wednesday.

The options to find replacements to Iranian oil have widened after OPEC agreed with Russia and other oil-producing allies last week to raise output from July by about 1 million barrels per day (bpd), with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers.

Saudi Arabia’s plans to pump up to 11 million (bpd) in July would mark a new record, an industry source familiar with Saudi oil production plans told Reuters on Tuesday.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 17 min 57 sec ago
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.