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 tonnes of crude oil from the Persian Gulf nation and is 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 tonnes of Iranian oil for import in November, the month when the US sanctions against Iran’s oil sector
While India wants to continue importing Iranian oil, albeit a reduced volume, US Secretary of State Mike Pompeo last month stated that 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 of nine million tonnes of Iranian oil in the 2018-19 fiscal (April 2018 to March 2019) or 0.75 million tonnes a month.
US sanctions against Iran kick in 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 Bank or IDBI Bank to route oil payments to Iran, sources said.
India had planned to import about 25 million tonnes of crude oil from Iran in the current fiscal, up from 22.6 million tonnes imported in 2017-18. But the actual volumes imported may be far less, as companies like Reliance Industries have totally stopped buying oil from Iran and others too are scaling it down in hope of winning a sanction waiver from the US.