Iran continues oil supply to India, but may halt

Oil&Gas Materials 22 July 2011 15:34 (UTC +04:00)
Iran continues oil supply to India, but may halt

Azerbaijan , Baku, July 22 /Trend D.Khatinoglu/

Iran may halt exporting oil to India, but it has not halted supplies for now, Mehr News Agency reported quoting Managing Director of international affairs in National Iranian Oil Company Mohsen Ghamsari as saying.

He said the Indian companies are keen to purchase Iranian oil, because their refinery equipment operate on Iranian oil type and changing this type of oil would pose some technical problems for Indian refineries.

"Saudi Arabian oil is not as same as Iranian oil and Riyadh can persuade India to buy its oil only by special discounts, " said Ghamsari.

Ghamsari noted both Iran and India are seeking the solution to oil payment. But the final decision is still to be taken by Iranian Oil Ministry takecare Mohammad Aliabadi, if the payment problem remains unsolved during the next couple of days.

Iran exports 400, 000 barrels of oil per day to India.

According to Central Bank of Iran Governor Mahmoud Bahmani, India's debt to Iran has reached to $5 billion.

Tension between the two countries for oil payment started on Dec. 23 when India's Central Bank (Reserve Bank of India) put restrictions on transactions with Iran through the Clearing House System, Asian Clearing Union, believed by Washington to be used by Tehran for bypassing international sanctions.

India has agreed to stop paying for its Iranian oil imports via Germany since the German Chancellor Angela Merkel intervened by instructing Germany's central bank Deutsche Bundesbank to stop clearing payments from India to the bank, known as EIH, which is under U.S. but not EU sanctions.

Iran is the second-largest crude supplier to India after Saudi Arabia and accounts for about 14 percent of the country's oil import bill.

India 's state-run refiner Hindustan Petroleum said on Thursday it will not get oil supplies from Iran in August with Tehran insisting on resolving a seven-month-old payment row, reported Reuters .

"We have not got allocation for August. They said the payment issue has to be resolved first," K. Murali, HPCL's head of refineries and international trade, told Reuters.

He also confirmed an earlier Reuters' report that HPCL has sought an additional one million barrels of oil for August from top producer Saudi Aramco.

"We will draw more from other suppliers with whom we have term deals. The year has just begun," he said, adding his firm has made adequate arrangements to replace Iranian volumes for August.

"As of now it suffices. We are going by rolling plan month by month," he said.

Going forward HPCL would seek additional supplies from United Arab Emirates, Kuwait, Iraq and Saudi Arabia to meet its oil needs, Murali said.

HPCL runs a 130,000-barrel per day (bpd) refinery in Mumbai and a 166,000 bpd facility at Vizag. HPCL has a term deal with National Iranian Oil Co to annually buy 70,000 bpd oil.