In the first clear indication of India's willingness to continue trade with Iran despite US sanctions, state refiners have contracted import of 1.25 million tons of crude oil from the Persian Gulf nation and are preparing to replace dollar payments with rupee trade.
Top industry sources said Indian
Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have
contracted 1.25 million tons of Iranian oil for import in November, the month
when the US sanctions against Iran's oil sector will kick in, the Economic
Times reported.
While India wants to continue
importing Iranian oil, US Secretary of State Mike Pompeo last month said
Washington would consider waivers on the embargo but made clear that these
would be time-limited, if granted.
Sources said IOC is importing the
"usual" monthly volumes of oil from Iran. It had planned to import 9
million tons of Iranian oil in the 2018-19 fiscal (April 2018 to March 2019) or
0.75 million tons a month.
US sanctions against Tehran will
become effective from November 4, which will block payment routes.
Sources said India and Iran are
discussing reverting to rupee trade after November 4.
"Iran has been off-and-on
taking rupee payments for oil it sells. This rupee it uses for paying for
imports of medicines and other commodities. A similar arrangement is in
works," a source said.
Details of the payment mechanism
would emerge in the next few weeks, he said.
Oil refiners such as state-owned
IOC and MRPL could use UCO BankNSE -1.76 % or IDBI BankNSE 0.79 % to route oil
payments to Iran, sources said.
India had planned to import about
25 million tons of crude oil from Iran in the current fiscal, up from 22.6
million tons imported in 2017-18. But the actual volumes imported may be far
less as companies like Reliance IndustriesNSE -6.54 % have totally stopped
buying oil from Iran and others too are scaling it down in hope of winning a
sanction waiver from the US.
On May 8, the US president pulled
his country out of the Joint Comprehensive Plan of Action (JCPOA), the nuclear
deal that was achieved in Vienna in 2015 after years of negotiations among Iran
and the Group 5+1 (Russia, China, the US, Britain, France and Germany).
Following the US exit, Iran and
the remaining parties launched talks to save the accord.