India to reduce Iranian oil imports
S Isayev, Trend.az, Feb 21 2012
India is pushing refiners to reduce oil imports from Iran by at least 10% for 2012/13, sources at two of the companies said, as tighter Western sanctions impact Iran’s trade, Reuters reported. India is Iran’s second-biggest market after China and the Islamic Republic provides about 12% or about 370,000 b/d of the Asian economy’s oil needs. The government had indicated companies should cut their imports from Iran by about 10-15%, one source said, while the other source said the cut should be “substantial”. The suggestion from the government to cut comes as Iran has tried to sell extra volumes to Indian refiners on long credit terms, the sources said. Tehran has found it increasingly difficult to sell oil in the face of the EU embargo from Jul 1 and a cut in imports by China over a price dispute, the sources said. State-run HPCL has already said it will cut imports by about 15& to 60,000 b/d in its annual contract with Iran which starts from Apr 1 while privately-owned Essar is sticking to 100,000 b/d. Other refiners have agreed volumes but have not yet signed deals with Iran, Reuters was told by the sources. A NIOC executive Reuters attempted to contact in Tehran was unavailable for comment.
India has said it will only abide by UN sanctions, and said other sanctions do not apply to it. It had said it would not seek a waiver from Washington to fresh US sanctions calling for importers of Iranian oil to make substantial cuts. But India has struggled to find ways to pay Iran after the US made dollar transactions almost impossible under financial sanctions. Refiners have used Turkey’s Halkbank for payments in euros since the middle of 2011, but are unsure how long that route will last given tougher EU sanctions. Delhi and Tehran have set up a payment method using the rupee, which is not freely traded on international markets, as a possible substitute for euro payments through Halkbank for some trade. The two are trying to increase the flow of exports from India to Iran to redress the existing trade imbalance, which sees the value of Iranian crude exports to India far outweigh the value of India’s total exports to Iran. India imports about $11b/yr of crude from Iran while its exports are just short of $3b. In 2011/12, crude imports will be lower than the previous fiscal year’s 370,000 b/d due to payment problems triggered when India’s central bank scrapped a long-standing clearing house mechanism in Dec 2010 under US pressure.
