Iran has
warned it will stop crude oil supplies to India from August if its long-pending
bills aren't cleared and a favorable mechanism for future payments isn't
evolved, executives at two Indian refiners said Friday.
"We have got the letter from National Iranian Oil Co. They are saying
supplies can be halted," an executive at Mangalore Refinery &
Petrochemicals Ltd., who didn't wish to be named, told Dow Jones Newswires.
Executives at NIOC couldn't be reached for comment and didn't respond to
e-mailed requests for comment.
Iran is the second-largest
crude supplier to India
after Saudi Arabia,
accounting for about 13%-14% of the country's oil imports. Refiners including
Indian Oil Corp. Ltd. (530965.BY), Hindustan Petroleum Corp. Ltd. and MRPL use
Iranian crude.
India and Iran are trying to negotiate a new payment
mechanism after the Reserve Bank of India
in December stopped trade-related payments through the Asian Clearing Union,
which the U.S. says is
opaque and could be used by Tehran
to finance its alleged nuclear weapons program.
An executive at Hindustan Petroleum, who also didn't wish to be named, said the
payments are being lined up by the Reserve Bank of India and will be made shortly. "The
supplies are continuing and I don't see any threat," he said.
Indian Oil Finance Director P.K. Goyal and Bharat Petroleum Corp. Ltd. (500547.BY)
Chairman R.K. Singh said they weren't aware of any letter from Iran on August
crude supplies.
On May 31 India said it will
continue discussions with Iran
on crude oil payment settlements after two days of talks between officials from
both countries on ending an impasse over payments proved inconclusive.
Indian refiners owe Iran
$2 billion towards crude oil payments, NIOC Executive Director Seyed Mohsen
Ghamsari said in May after meetings with Indian officials.
"This has happened for the first time... They look to be pressuring the
Indian government to quickly resolve the payment issue," an Indian trader
with a state-run oil firm said.
Traders and industry executives say Iran
won't stop exports to Asia's third-largest economy as it needs an outlet for
its oil when the number of companies it can deal with is gradually shrinking
because of the West's sanctions on Tehran
over its nuclear program.
Iran, which has been supplying oil to Indian refiners on credit since the start
of this year, may find it difficult to place its crude elsewhere at a time when
Saudi Arabia is boosting its oil output after an Organization
of Petroleum Exporting Countries meeting earlier last month failed to agree on
raising its output quota.