India finds way to pay for Iranian crude

“There has been no disruption in supplies (since RBI on December 23 dissolved the mechanism of routing US dollar or euro payments to Iran). We have a mechanism in place for January supplies,” Oil Secretary S Sundareshan told PTI here.

India imports 12 million barrels of crude oil every month from Iran. Iran accounts for 12 per cent of India’s supplies and is its second-largest supplier behind Saudi Arabia.

“As we speak,a ship is being loaded in Iran for delivery (to Indian Oil Corp) on January 8,” he said. Another cargo is scheduled to reach Essar Oil’s Vadinar Refinery in Gujarat on January 10 and a vessel load will reach MRPL’s Mangalore Refinery a day or two later.

Iran wants Indian firms to open euro accounts with Iranian-owned EIH,which is also known as European-Iranian Trade Bank AG,but that may not be a permanent solution,as the US had imposed sanctions against the bank in September.

Sundareshan said a delegation led by an Additional Secretary in the Ministry of Finance and comprising representatives from the RBI,SBI and oil companies will visit Tehran on January 14-16 to find a permanent solution to the issue.

The Reserve Bank of India said last month that oil payments to Iran can no longer be settled using a long- standing clearing house system run by the central banks of nine countries — including India and Iran — dubbed the Asian Clearing Union.

“We are getting full cooperation from Iran and are hopeful of finding a solution soon,” Sundareshan said.

Industry sources said that Iran was ready for rupee payments,but RBI has for so far stonewalled the proposal.

Payment for Iranian crude in Japanese yen is also not possible as the US sanctions prohibit any freight payment for Iranian crude in Japanese currency.

The UAE dirham is also being considered as an alternative currency,but this also can not be a permanent solution,as the Middle East country strictly monitors payments routed to Iran and may block them under pressure from the US.

Sources said the best option was to pay Iran in Indian rupees,or in Chinese currency. The payment option,as well as issues like credit period,will be discussed at the Tehran meeting next week.

India imported 21.3 million tonnes of crude oil from Iran in 2009-10 and imports in 2010-11 are expected to amount to around 18 million tonnes,as Reliance Industries has totally stopped using crude oil from the Persian Gulf nation.