A multi-disciplinary ministerial team will leave for Iran on January 16 to work out the modalities for a ‘payment plan' to ensure smooth supplies of crude oil from Tehran, the second biggest exporter of oil to India, in view of impeding U.S. sanctions against Iran.
Senior officials associated with the development said the government was working on various fronts to ensure that things did not get out of control. Apart from monitoring the situation constantly by National Security Advisor Shivshankar Menon, a move is afoot in the government to get the U.S. administration on board on the issue of crude oil supplies from Iran.
“We are one among the biggest importers of crude oil from Iran. Japan is the biggest importer followed by South Korea. All are close U.S. allies and there is a feeling that any sanctions to block supplies will badly hit their people and the economy. Therefore, a channel needs to be opened with the U.S. to either ensure payment for the oil through some source or to ensure that crude oil imports are exempted from sanctions,'' a senior official remarked. The task of the team will be to work out a payment arrangement with Tehran in view of the Turkish bank having expressed its unwillingness to carry on with the transactions in future, probably under U.S. and European Union pressure. “We could also be negotiating with Iran for payment through rupee mode but the Reserve Bank of India has some reservations on the issue and we are trying our best to work around things,'' a senior Petroleum Ministry official said .
The official said that looking for alternative sources to meet the energy requirements was a long-term plan and the present situation demanded a solution that would not aggravate the already hotted up oil market.
Under the proposal being prepared, National Iranian Oil Company will open a rupee account with Indian banks and can use the money to purchase non-strategic items like railway imports and buying commodities. It cannot, however, use the money to invest in India or buy shares or companies. A list of what Iran can do with the money and what it cannot is being prepared.
India had in February last year started making euro payments through an Iranian bank based in Germany. But under U.S. pressure, Germany soon stopped accepting money from India for onward transfer to Hamburg-based EIH Bank, sending India to the doorstep of Turkey.
Mr. Menon has already held a round of meeting with officials in the ministries of finance, petroleum and external affairs and the RBI after indications from Turkey's state-run Halkbank that it would have to stop settling payments on behalf of Indian companies. A meeting before the Indian team leaves for Iran has been scheduled in the oil ministry later this week.
Keywords: Iran-India oil trade