Iran has assured India of uninterrupted crude oil supplies in January and proposed a temporary payment channel through a bank based in Germany, a senior Indian official said Tuesday, in a step forward to ending the deadlock over oil-related payments to the Islamic Republic after India's central bank imposed some curbs.
Iran
has
assured
India
of
uninterrupted crude oil supplies in January and proposed a temporary payment
channel through a bank based in
Germany
, a
senior Indian official said Tuesday, in a step forward to ending the deadlock
over oil-related payments to the Islamic Republic after
India
's
central bank imposed some curbs.
The official, declining to be named, told reporters that the National Iranian
Oil Co., in a letter to Indian oil companies, said payments can be routed through
a euro account at Europaisch-Iranische Handelsbank AG.
The Indian government has advised the oil companies to open individual accounts
with State Bank of
India
(500112.BY), which in turn will make payments to the bank in
Germany
, the
official added.
Iran
's
central bank has an existing account at EIH AG, the official said.
EIH AG is a Hamburg-headquartered bank specializing in services and business
opportunities with
Iran
. It
has branches in
Tehran
and
in the Free Zone of Kish Island.
NIOC and the Iranian central bank couldn't be immediately reached for comments.
A delegation of Indian officials will be visiting
Tehran
in
mid-January for talks on a more lasting solution for oil-related payments, the
official said.
An early impasse to the issue is critical for both energy-hungry
New
Delhi
and sanctions-hit
Tehran
.
Iran
is
the second-biggest supplier of crude to
India
after
Saudi Arabia
,
accounting for about 14% of the country's oil import bill.
Friday, central bank officials of the two countries met in the Indian financial
capital of Mumbai, but an immediate resolution wasn't found.
NIOC had proposed that
India
's oil
companies, including Indian Oil Corp. (530965.BY) and Mangalore Refinery &
Petrochemicals Ltd. (500109.BY) open accounts with EIH AG, according to the
official.
But
India
has
said that companies should open accounts with the State Bank of
India
,
which in turn will deal with EIH to make the process easier.
SBI is
India
's
largest lender by assets and has a branch in
Frankfurt
in
Germany
.
"We have taken it up with SBI to open an account in EIH on behalf of other
companies," the official said.
Separately,
India
's Oil
Secretary S. Sundareshan, the ministry's top bureaucrat, said Tuesday that
there has been no disruption in supplies.
"Tankers are loaded. There is no disruption. It is being resolved. We will
find some way," he said.
The impasse came about after the Reserve Bank of
India
said
that all trade-related payments with
Iran
had
to be cleared outside the Asian Clearing Union mechanism.
The ACU is a clearing house arrangement amongst nine central banks, including
that of
Iran
and
South Asian nations. All trade-related payments are settled every two months on
a net basis through the ACU. But this cycle led to pressure from the
U.S.
,
which says the system is opaque and
Tehran
could
be using it to finance its alleged nuclear weapons program.
The European Union on Oct. 25 asked for euro-related currency settlements to be
certified on a transaction-by-transaction basis, forcing central banks to issue
certificates for payments made for all commodities, including oil.
India
has
maintained that the new EU regulations have created administrative and
technical issues due to which it had curbed payments through the ACU.
Indian oil companies said that they have had a "barrage of
communication" in recent days with NIOC to sort out the issue.
"Our January (crude oil) loadings are already going on and our payments
are not due until March. We have sufficient time for the issue to be sorted
out," said a senior official with Hindustan Petroleum Corp. (500104.BY),
which imports 3 million metric tons of crude a year from the Islamic nation.
"All payment issues are being handled by the RBI and SBI, as they are at
the forefront of the matter," said a top official at another oil company,
declining to be named.
Any impasse would have minimal impact for Indian Oil and Chennai Petroleum
Corp. (500110.BY) as they source only 3-4% of their total crude throughput from
Iran
,
rating agency Icra said.
But MRPL imports about 7.6 million tons a year from NIOC, accounting for around
60% of its annual crude oil requirements.
"MRPL of late has been getting a credit period of 90 days for crude oil
imported from
Iran
,
which would be significantly lower at around 30 days from other suppliers, and
hence can result in an increase in the working capital intensity of the
company," Icra said.
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