Delhi will continue to source its crude oil requirement from Tehran

Asserting that it will not be dictated by any individual country or bloc for imposing sanctions against Iran, India is understood to have strongly conveyed that it was only bound by United Nations-backed sanctions and would continue to “fully source” its crude oil requirement from Tehran.

With indications that both New Delhi and Tehran are looking at a new way to make payments for the purchase of crude oil, Petroleum and Natural Gas Minister Jaipal Reddy said best efforts were being made by the country to source crude oil imports from Iran and the country was not bound by the U.S. or European Union sanctions.

In a related development, Essar Oil is also understood to have renewed its contract for supply of crude oil from Iran for another five years. In reply to a query by The Hindu, Essar spokesman said: “We decline to comment; Essar Oil continues to be able to source the crude that it requires from Iran.”

Mr. Reddy said: “I can only say Iran's attitude to India is still very positive. We have made our best efforts to make payments. In spite of difficulties, the government of Iran has put up with us. It will be our effort to tap Iran as a source of crude oil fully.”

The multi-disciplinary Ministerial task force has returned after holding talks with Iran on finding a ways to source payments for future oil purchases in view of the U.S. and EU sanctions. It is learnt that India is toying with the idea of opening a rupee account to make payments subject to approval by the Reserve Bank of India (RBI).

Mr. Reddy said India would respect every bit of sanctions imposed by the United Nations. “We do not go by the sanctions imposed by regional blocs or individual nations,” he said, virtually rejecting the U.S. sanctions that denies access to the U.S. financial system to any foreign bank that conducts business with the central bank of Iran.

“The situation is still evolving. We will find ways of meeting the situation as it evolves,” he said on the issue of exploring new options for making payments in case the current conduit through the Turkish bank comes to a halt.

Looking at options

Iran accounts for 12 per cent of India's crude oil imports and there are fears that Turkey may come under pressure and stop routing payments. “Iran is the second largest supplier of crude oil to India. There will be no energy supplies problems even in case of shutdown of supplies from the Persian Gulf nation. Indian refiners are looking at diversifying their sourcing to avoid problems in future,” he said. State-run Mangalore Refinery and Petrochemicals Ltd (MRPL) is the largest buyer of Iranian oil at 1.42 lakh barrels a day.

However, MRPL chairman Sudhir Vasudeva said here on Wednesday that it was looking at diversifying its oil purchase. “The crude oil import from Iran is an area of concern. We are keeping all the options open. We have to be alive to the situation.”

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