India's oil woes

India Said to Be Told Turkey May Stop Routing Iran Oil Payments

Turkiye Halk Bankasi AS has told Indian oil refiners it may no longer be able to act as an intermediary for their purchases of Iranian crude, four people with knowledge of the matter said.

Bloomberg, 

10 January, 2010

Executives from the crude-processing companies met with Indian oil ministry officials yesterday to discuss alternatives, including routing remittances through Russia, the people said, declining to be identified because the information is confidential. Other options that were considered included stopping purchases from Iran altogether and importing from other countries, they said. Indian officials are scheduled to visit Tehran for trade talks Jan. 16-21, two of the people said.

Indian buyers such as Mangalore Refinery & Petrochemicals Ltd. and Hindustan Petroleum Corp. have faced difficulties finding lenders willing to handle payments to Iran because of sanctions against banks in the Gulf state. Saudi Arabia will increase crude exports to some Indian refiners this year as they seek to diversify supplies, four people with knowledge of the plans said Nov. 15. Prime Minister Manmohan Singh discussed alternative financial conduits with Russian officials during his visit to Moscow in December.

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India seeks waiver on Iran oil embargo

India has expressed concerns over the new US sanctions on the Iranian oil sector, saying it will seek waivers on the embargo to deal with the potential impacts of the measures on its crude supply.

Press TV, 

9 January, 2011

Senior Indian officials are set to begin negotiations with the US to win waivers to minimize the possible repercussions of the US-led sanctions on India. 

India's Foreign Secretary Ranjan Mathai is expected to discuss the matter further during his upcoming visit to Washington. 

India's National Security Adviser Shivshankar Menon also met with US Ambassador to India Peter Burleigh on Friday to discuss the issue. 

India meets about three-quarters of its crude demands through imports and Iran is its second-largest supplier after Saudi Arabia. 

On December 31, US President Barack Obama signed into law fresh economic sanctions against Iran's Central Bank in an apparent bid to punish foreign companies and banks that do business with the Iranian financial institution. 

The bill requires foreign financial firms to make a choice between doing business with Iran's Central Bank and oil sector or with the US financial sector. The legislation will not go into effect for six months to allow buyers of Iran's oil to find alternative suppliers. 

Earlier on Thursday, Chinese Foreign Ministry spokesman Hong Lei rejected the new US sanctions against Iran's oil sector and said the commercial ties with Iran are totally legitimate and should not be subjected to any form of punishment. 

South Korean and Japanese officials are also mulling plans to ignore US sanction against Iran. 

The United States is mounting pressure on foreign firms to stop buying Iranian crude in a bid to force Tehran to end its nuclear energy program. 

Meanwhile, energy experts say the sanctions could lead to a major hike in crude oil prices. 

US sanctions, as well as unilateral embargoes imposed on Iran's energy and financial sectors by Britain and Canada came after the International Atomic Energy Agency (IAEA) issued a report on Iranian nuclear program early November, accusing Tehran of seeking to weaponize its nuclear technology. 

Tehran argues that as a signatory to the nuclear Non-Proliferation Treaty and a member of the IAEA, it has the right to develop and acquire nuclear technology for peaceful objectives. 

India to pay for Iran crude in rupees

In the wake of the US decision to impose fresh sanctions against the Islamic Republic that would target its oil exports, India announces plans to pay for the Iranian crude it imports in rupees.

Press TV,

8 January, 2011

A senior Indian government official, speaking on condition of anonymity, said the issue will be addressed when a multi- disciplinary team visits Tehran on January 16 to discuss uninterrupted supply from the major oil producer, the Press Trust of India reported on Sunday. 

Under the proposal, the National Iranian Oil Company (NIOC) will open a rupee account with Indian banks, and can use the money to purchase non-strategic commodities like railway imports. 

India satisfies about three-quarters of its crude demands through imports; and Iran is its second-largest supplier after Saudi Arabia. 

The South Asian country currently pays USD 1 billion every month to Iran for the 370,000 barrels per day of crude oil it purchases from the Islamic Republic. India uses Turkey as a conduit in order to pay for Iranian crude. 

India has been looking for an alternative payment mechanism for crude from Iran after the Reserve Bank of India in December 2010 announced that payments for Iranian crude oil imports would have to be settled outside the existing Asian Clearing Union (ACU) mechanism. 

The Asian Clearing Union (ACU) mechanism involves the central banks of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka. 

Under the mechanism, imports by the nine nations are settled every two-months with every member paying for imports after netting out its exports among the union. 

In February 2011, Iran and India agreed to set up a new mechanism for the oil payments using euros through the Hamburg-based European-Iranian Trade Bank AG (EIH Bank). 

But under the US excessive pressure, Germany soon stopped accepting money from India for onward transfer to EIH Bank, sending India to the doorstep of Turkey. 

On Thursday, India's National Security Advisor Shiv Shankar Menon held talks with officials from the Indian ministries of finance, petroleum and external affairs as well as the Reserve Bank to explore avenues following indications that Turkey's state-run Halkbank would stop settling oil payments on behalf of India. 

"There are chances that Turkey may come under pressure after a fresh round of US sanctions imposed on Iran," an Indian official said. 

On December 31, US President Barack Obama signed into law fresh economic sanctions against Iran's Central Bank in an apparent bid to punish foreign companies and banks that do business with the Iranian financial institution. 

The bill requires foreign financial firms to make a choice between doing business with Iran's Central Bank and oil sector or with the US financial sector. 

The legislation will not go into effect for six months in a bid to provide oil markets with time to adjust. 

Meanwhile, energy experts say the sanctions could lead to a major hike in crude oil prices and disrupt the interests of the US and its allies that depend on oil imports from Iran. 

Facing major economic troubles, the United States is reportedly the world's largest debtor nation.