Can't halt the import of Iran oil, India to tell US

New Delhi is likely to tell Washington this week that it would not halt import of Iranian crude because of technical and monetary advantages it brings for Indian refineries.

The government will tell the US that the cut in imports — to 12.9 million tonnes in 2012-13 from 18.1 million tonnes in 2011-12 — was the best it could do in the circumstances, official sources said.

"Though (import) volumes have declined, we will tell the US that it is difficult to source alternative crudes because of technical specifications and the pricing methodology of Iranian crude," a senior official said.

Iran offers sweet light crude to which most of India's older refineries are configured, and the available alternative — from Saudi Arabia — is unsuitable. "Saudi's shut-in spare capacity is too heavy and sour — a wrong kind of oil — to substitute Iranian crude at our refineries," a source said.

Also, India will argue that Iran offers a 90-day credit line compared to the 30-day credit that Saudi Arabia and other Middle Eastern countries give. "That improves refining margins," the official said.

India has, however, declined Iran's proposal to make payments in roubles or yuan.

A top source said that India had informally conveyed to officials of the National Iranian Oil Company (NIOC) that it was "not possible" to agree with its March 12 proposal. "As per February 6 sanctions, the only payment route open to Indian refineries is in Indian rupees," a source said.

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