Oil Minister Dharmendra Pradhan t said 8 October 2018 two state refiners have placed
orders for importing crude oil from Iran in November, the month when US
sanctions on Iranian oilpurchases
take effect. "Two of our oil companies have made nominations to purchase
Iranian oil in November," he said speaking at The Energy Forum here.
"We do not know if we will get waiver (from US sanctions) or
This is the first time Pradhan has
spoken about India's stand on buying Iranian oil once the US sanctions on Iran
come into force from November 4.
Later, talking to reporters, he said India has
its own energy requirements which it has to fulfill.
"We will be guided by our national
interest," he said.
While India wants to continue importing Iranian
oil, albeit a reduced volume, US Secretary of State Mike Pompeo last
month stated that Washington would consider waivers on the embargo but made it
clear that these would be time-limited, if granted.
For rupee payments, oil companies could
use UCO Bank or IDBI Bank to
route oil payments to Iran, sources said.
India had planned to import about 25 MT of crude
oil from Iran in 2018-19, up from 22.6 MT imported in 2017-18. But the actual
volumes imported may be far less as companies like Reliance Industries have
totally stopped buying oil from Iran and others too are scaling it down in hope
of winning a sanction waiver from the US..
US President Donald Trump in
May withdrew from the 2015 nuclear accord with Iran, re-imposing economic
sanctions against the Persian Gulf nation. Some sanctions took effect from
August 6 while those affecting the oil and banking sectors will start from
Sources said Iran is open to accepting rupee
payment for oil and may use the money to pay for equipment and food items it
buys from India.
UCO Bank and IDBI Bank have been identified to
route the payment as the two have no exposure to the US financial system.
UCO Bank had in the previous round of sanctions
handled rupee payments.
Currently, India pays its third largest oil
supplier in euros using European banking channels. These channels would get
blocked from November
During the first round of sanctions
when EU joined the US in imposing financial restrictions, India initially used
a Turkish bank to pay Iran for the oil it bought but beginning February 2013
paid nearly half of the oil import bill in rupees while keeping the remainder
pending till opening of payment routes. It began clearing the dues in 2015 when
the restrictions were eased.
Besides, New Delhi sought to get around the
restrictions by supplying goods including wheat, soybean meal and consumer
products to Iran in exchange for oil.
Sources said this time around the entire 100 per
cent of Iranian oil import bill can be paid in rupees.
Iranian oil is a lucrative buy for refiners as
the Persian Gulf nation provides 60 days of credit for purchases, terms not
available from suppliers of substitute crudes -- Saudi Arabia, Kuwait, Iraq,
Nigeria, and the US.
Besides blocking of banking channels from
November, the absence of payment mechanism may pose a challenge to the
transportation of the oil as Iranian crude is bought on a CIF basis and shipped
on Iranian tankers.
Under Cost, Insurance and Freight (CIF) mode of
shipping, the seller assumes the responsibility of transportation and
insurance. The liability and costs associated with successful transit are paid
by the seller until the goods are received by the buyer.