Thanks to the landmark nuclear deal between Iran and global powers, India is looking forward to clearing its pending payments to the tune of $6.5 billion to Tehran for crude oil purchases.
India has enjoyed a longer payment cycle and uninterrupted supplies from Iran even as the sanctions existed, Financial Express reported.
“The final deal would take some months to roll out. Till then, India would look to put in place a payment mechanism. We are waiting for Tehran to respond,” an official privy to the development told FE. Either an Iranian delegation would visit New Delhi or we would visit Tehran, the official added.
Indian refiners - MRPL, Essar Oil and IOC - have been buying crude oil from the Islamic nation. However, the payments could not be routed due to sanctions levied by the US and Western powers.
India is the world’s fourth largest oil consumer and also the second biggest buyer of Iranian oil after China. India had to drastically cut down its imports from Tehran as a result of the sanctions - in 2014-15, India bought just 10-11 million tonne (mt) of crude oil from Iran.
In 2009-10, crude imports from Iran stood at 21.2 mt, which declined to 18.50 mt in 2010-11, 18.11 mt in 2011-12 and to 13.14 mt in 2012-13.
New Delhi settled some bills for crude oil purchases with Tehran in lieu of other exports from here such as basmati rice. India’s basmati rice exports to Iran constitute around 25% of total value as well as volume of annual aromatic rice shipments. Both countries had launched a ‘rupee settlement mechanism’ from April 2012 to avoid sanctions from the US and EU. As part of the initiative, state-owned UCO Bank tied up with Iranian lenders - Parsian, Pasargad, Saman and EN Banks - for settlement.
Meanwhile, India is awaiting Tehran’s response for letting ONGC Videsh sign the the contract giving rights to develop the Farzad B gas field. Earlier, India has sent its proposal to the Hassan Rouhani-led government.
Moreover, energy deficit India, which imported $125 billion worth of crude oil and products in FY15, is making strong efforts to secure contracts to monetise prolific Farzad B gas field in Iran.