India's state-run Mangalore Refineries and Petrochemicals (MRPL) will ship a cargo of diesel to Iran for the first time this month, filling the void left by privately-owned rival Reliance, three sources said.

The industry sources also told Reuters that MRPL is hoping to secure a long-term deal to sell more diesel to Iran, strengthening ties between OPEC's second-biggest member and Asia's third-largest economy, which is eager to secure energy abroad.

Iran was forced to buy diesel cargoes from as far afield as Singapore this winter after Reliance Industries stopped selling it fuel last year when its bankers refused to confirm letter of credit raised by Iran's central bank.

Increasing Western pressure over Tehran's nuclear programme has made it more difficult for the Islamic Republic to do business abroad, although the governments of fast-growing China and India have proven more than happy to do deals.

"NIOC will finalise the strategy for the whole year whether to buy additional volume for a year from MRPL after this cargo," a senior industry source told Reuters. "Formal talks on an annual deal may begin after the first parcel."

One source said MRPL would be able to sidestep the payment problems that Reliance faced by settling its deals through the government-run State Bank of India.

Reliance, which operates a 660,000 barrels per day (bpd) refinery on India's west coast, had used foreign banks such as BNP Paribas and Calyon to guarantee counterparty credit on its deals.

Sources said MRPL's first deal was for a 30,000-35,000 tonne late-April cargo of 0.5 per cent sulphur diesel, sold at an undisclosed premium to Middle East spot quotes. They said the deal had been concluded last week.

Iran is forced to import motor fuels due to a lack of production from its ageing refineries, but is working hard to reduce its dependence on international markets.-Reuters