New Delhi: India has made its first payment in more than five months for crude oil its buys from Iran when a $100 million wire-transfer by Mangalore Refinery and Petrochemicals Ltd (MRPL) was received by Tehran via Turkey.
MRPL last week deposited an equivalent of $100 million in a rupee account in the New Delhi branch of Union Bank of India which then routed euros equivalent to state-owned Turkiye Halk Bankasi (Halkbank) in Istanbul.
Halkbank has since transferred the money to the account of the National Iranian Oil Co (NIOC), sources said.
“The pipeline (for payments) has been opened... we have confirmation that money transferred has reached the intended beneficiary,” a source said.
MRPL’s was a test payment and now more refiners will use the same route to pay Iran. Essar Oil, the nation’s second biggest importer of Iranian oil after MRPL, is to transfer money on Monday and will be followed by state-owned Indian Oil and Hindustan Petroleum, each sending $50 million.
This is the first payment Indian refiners have made to Iran since February when it had paid 1.5 billion euros through German-based Iranian bank Europisch-Iranische Handelsbank AG (EIH Bank). But soon after that payment, US convinced Germany to block that conduit.
India owe more than $7 billion to their second biggest oil supplier after Saudi Arabia.
Iran had on Sunday stated that the payment problem, which arose when RBI in December last year unilaterally scrapped a long-standing mechanism of trade through region’s central bank, with India has been resolved.
The Iranian oil ministry’s website SHANA on Sunday quoted NIOC managing director Ahmad Qalebani to say that “the problem of India payments for imported oil from Iran has been solved”.
It quoted NIOC’s director for International Affairs Mohsen Qamsari as saying that “the two sides had reached an agreement on the arrear payments... related bank accounts have been announced to Indian side and the amount deposited into our accounts would be revealed by reopening of the international banks on Monday”.
Iran’s 4 lakh barrels per day of oil exports, which is 12% of India’s needs, were “going on as usual”, he said.
The Reserve Bank of India (RBI) had on 23 December last year scrapped the Asian Clearing Union (ACU), winning appreciation from the US, which is using sanctions to force Tehran to halt its nuclear programme.
Sources said Iran, which has been supplying some 400,000 barrels of oil per day on credit since the RBI move, had previously provided no plans for shipping oil in August but refiners can expect crude as usual.
Iran had on June 27 written about stopping supplies from August if the dues are not paid.
Qamsari said, “A notice had been sent to Indian indebted oil refineries, but this did not mean stoppage of oil exports to the country”.
“NIOC has no plan to suspend oil exports to India,” he said, pointing to good relations with India.
Indian refiners had tapped Saudi Arabia, Kuwait and Iraq to cover for any supply disruption from Iran.
MRPL is the largest buyer of Iranian crude, at 1,42,000 bpd, while Essar buys 1,10,000 bpd of oil from Tehran.