The historic accord between the Western super powers and Iran is expected to pave way for India to pay Iran in Euros for the crude oil it imports from the Persian Gulf state.
However, India will have to stick to its plans to reduce crude oil imports from Iran by over 15 per cent to about 11 million tons in the year ending March 31, 2014, as easing of the Western economic sanctions still do not allow increased buying.
India had since July 2011 paid in Euros to clear 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent due amount was remitted in rupees in accounts Iranian oil company opened in Kolkata-based UCO Bank.
Tougher sanctions blocked the payments in Euro through Turkey from February 6 this year but the rupee payments for 45 per cent of the purchases continued through UCO Bank.
The US and five other world powers struck an accord with Iran on Saunday, agreeing to ease part of an economic stranglehold in exchange for steps to cap Tehran’s nuclear programme and ensure the Islamist government doesn’t rush to develop atomic weapons.
The easing of sanctions re-opened the Euro channel to pay for Iranian oil while European Union lifted ban on insuring tankers carrying oil from the Persian Gulf state, officials in the petroleum ministry and oil companies said.
“Our understanding of the agreement is that payment channel is now clear. We now have to sit down with the Iranians to discuss which bank or country the payments can be routed from,” an official said.
Also, with European reinsurers refusing the provide cover to ships carrying Iranian oil, imports virtually came to a stop in first quarter of current fiscal and resumed only after Iran ferried the oil in its own tankers.
This will, however, ease with the end of the EU ban that is part of a first-step agreement that will give Iran as much as $ 7 billion in relief from economic sanctions over six months.
Despite easing of sanctions, India will buy no more than the planned 11 million tonne crude oil from Iran in the current fiscal, over 15 per cent lower than 13.1 million tonne oil imported from Iran in 2012-13.
The refiners have accumulated around $ 2 billion in dues to Iran ever since payment in euros through Turkish Halkbank was stopped in February after sanctions were tightened against Iran.
With Agency inputs