India to continue Iranian oil imports post US sanctions

NEW DELHI: In the first clear indication of India's willingness to proceed industry with Iran regardless of US sanctions, state refiners have shriveled import of 1.25 million tonnes of crude oil from the Persian Gulf country and is preparing to switch buck bills with rupee industry.

Top trade assets said Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have shriveled 1.25 million tonnes of Iranian oil for import in November, the month when the USA sanctions in opposition to Iran's oil sector kick-in.

While India needs to proceed importing Iranian oil, albeit a discounted quantity, US Secretary of State Mike Pompeo final month said that Washington would imagine waivers at the embargo however made clear that these could be time-limited, if granted.

Sources said IOC is importing the "usual" per month volumes of oil from Iran. It had deliberate to import of nine million tonnes of Iranian oil within the 2018-19 fiscal (April 2018 to March 2019) or 0.75 million tonnes a month.

US sanctions in opposition to Iran kick in from November four, which will block cost routes.

Sources said India and Iran are discussing reverting to rupee industry after November four.

"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 cost mechanism would emerge in the next few weeks, he said.

Oil refiners akin to state-owned IOC and MRPL may just use UCO Bank or IDBI Bank to course oil bills to Iran, assets said.

India had deliberate to import about 25 million tonnes of crude oil from Iran within the present fiscal, up from 22.6 million tonnes imported in 2017-18. But the actual volumes imported may be a long way less as corporations like Reliance Industries have totally stopped buying oil from Iran and others too are scaling it down in hope of profitable a sanction waiver from the USA.

Nayara Energy, previously Essar Oil, too is stopping import from Iran.

US President Donald Trump in May withdrew from the 2015 nuclear accord with Iran, re-imposing financial sanctions in opposition to the Persian Gulf country. Some sanctions took impact from August 6 whilst those affecting the oil and banking sectors will start from November four.

Sources said Iran is open to accepting rupee cost for oil and would possibly use the money to pay for equipment and food pieces it buys from India.

UCO Bank and IDBI Bank have been identified to course the cost as the 2 don't have any exposure to the USA monetary machine.

UCO Bank had within the earlier round of sanctions treated rupee bills.

Currently, India can pay its third largest oil provider in euros the usage of European banking channels. These channels would get blocked from November.

During the first round of sanctions when EU joined the USA in enforcing monetary restrictions, India initially used a Turkish financial institution to pay Iran for the oil it purchased however starting February 2013 paid nearly half of the oil import invoice in rupees whilst preserving the remaining pending opening of cost routes. It began clearing the dues in 2015 when the restrictions have been eased.

Besides, New Delhi sought to get around the restrictions by means of supplying goods together with wheat, soybean meal and shopper merchandise to Iran in change for oil.

Sources said this time round all of the 100 in keeping with cent of Iranian oil import invoice can also be paid in rupees.

Iran is India's third-largest oil provider at the back of Iraq and Saudi Arabia. It was once India's 2d biggest provider of crude oil after Saudi Arabia until 2010-11 however Western sanctions over its suspected nuclear programme relegated it to the 7th spot within the next years. In 2013-14 and 2014-15, India purchased 11 million tonnes and 10.95 million tonnes respectively from it.

Sourcing from Iran higher to 12.7 million tonnes in 2015-16, giving it the 6th spot. In the following 12 months, the Iranian provides jumped to 27.2 million tonnes to catapult it to the third spot.

Iranian oil is a lucrative purchase for refiners because the Persian Gulf country provides 60 days of credit score for purchases, phrases not to be had from suppliers of exchange crudes -- Saudi Arabia, Kuwait, Iraq, Nigeria, and the USA.

Besides blocking off of banking channels from November, the absence of cost mechanism would possibly pose a challenge to the transportation of the oil as Iranian crude is purchased on a CIF basis and shipped on Iranian tankers.

Under Cost, Insurance and Freight (CIF) mode of delivery, the seller assumes the responsibility of transportation and insurance. The liability and costs associated with a hit transit are paid by means of the seller till the products are received by means of the consumer.
India to continue Iranian oil imports post US sanctions India to continue Iranian oil imports post US sanctions Reviewed by kailash soni on October 05, 2018 Rating: 5
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