No Iran oil for Indian refineries for August

No Iran oil for Indian refineries for August

New Delhi: In signs that Iran is serious about shutting off crude oil supplies to India over unpaid bills, the Islamic Republic has not allocated any volumes for supply to any of the Indian refiners for August.

The tough stand by a nation that supplies 12% of India’s oil needs has forced refiners to buy extra crude from Saudi Arabia, Kuwait, United Arab Emirates and Iraq while sending the government scrambling for a conduit to clear $5 billion in overdue bills.

Iran, which has been selling crude oil on credit since late December when Reserve Bank of India halted use of a clearing mechanism under US pressure, had on 27 June written about stopping supplies from August if the dues are not paid.

Mangalore Refinery (MRPL), Essar Oil, Hindustan Petroleum (HPCL), Indian Oil (IOC) and Bharat Petroleum (BPCL) have not received any intimation from National Iranian Oil Co (NIOC) on the quantity of crude they will get from Iran in August, officials at the refiners said.

MRPL, the largest buyer of Iranian crude at 1,42,000 barrels per day, has sought additional volumes from Saudi Arabia to meet the shortfall, they said adding Essar already has alternate supplies tied-up for two-third of the 110,000 bpd of oil it had contracted from Iran.

HPCL is talking to Saudi Arabia and UAE to make up for the shortfall of 2 cargoes per month it gets from Iran under its 68,000 bpd annual supply contract.

Officials said BPCL had signed up for import of 1 million tonnes (20,000 bpd) from Iran this year. The supplies were to start in August but uncertainty over payments has meant that it will not get any crude.

Sources said a team of RBI officials last week visited Russia to explore paying $12 billion for annual imports from Iran while routing payments through Turkey and UAE were also being explored.

Routing payments in lira through state-owned Turkiye Halk Bankasi in Istanbul and in Euro through the Central Bank of the UAE were under finalization.

The identified banks were agreeable to the US which is creating hurdles against routing money through Iranian banks like Germany-based EIH, which was briefly used to clear some outstanding earlier this year before that route was blocked.

India’s debt to Iran for unpaid oil has mounted to more than $5 billion after RBI last December stopped using the Asian Currently Union, winning praise from the US which is using sanctions to force Tehran to halt its nuclear programme.

Meanwhile, the government has asked its officials not to speak anything on the issue of alternative mechanism being worked out to pay for Iranian oil.

It fears any such news leaks could lead to US exerting pressure to block the conduit.