Indian conglomerate Essar Group, is looking to tap frozen Iranian oil revenues for its steel exports to Tehran, in a novel attempt to work around western financial sanctions against the Islamic Republic, Reuters reported on Friday.
The National Iranian Oil Company (NIOC) proposed the payment mechanism in August, potentially opening a new way to release oil export proceeds tied up in India under western sanctions linked to Tehran’s nuclear energy program.
Reuters quoted from industry and government sources and its own reviewed letters that Essar has asked the Indian government to free it from paying its share of oil dues to Iran, and instead offset them against a $2.5 billion deal to supply steel plate to a NIOC affiliate.
The back-to-back scheme comes to light at a critical stage in talks between Iran and six world powers (the P5+1).
Negotiators this week extended talks on a deal to mid-2015, and with it an interim agreement allowing Iran to be paid for some of its oil exports.
At a Nov. 3 meeting at India’s oil ministry, which included the commerce and finance ministries and oil refiners, agreement was reached in principle on the deal, subject to final government approval, oil ministry sources said, as reported by Reuters.
