Oil Deals With India Under New Terms

Oil Deals With India Under New TermsOil Deals With India Under New Terms

Ruling out the settlement of oil dues in rupees, the Central Bank of Iran has informed Indian refineries that oil sales to India will only be possible in euros.

Mohsen Qamsari, director of international affairs at the National Iranian Oil Company, made the statement in response to Indian oil officials' comment on oil sale concessions Iran used to grant to India during sanctions, Mehr News Agency reported.

Commenting on new terms in oil contracts to be signed with Indian refiners, the official added that CBI is in charge of clearing dues for oil sold to refining complexes, including those in India.

"The recent correspondence between CBI and Indian refiners calls for transferring euros instead of rupees to purchase Iran's crude," Qamsari said, adding that the decision has been made by CBI and the National Iranian Oil Company has played no role in this regard.

Asked about the total elimination of rupees from oil deals, he announced, "Based on its own policies, CBI itself decides about the currency it wants to receive from customers and currently it has made a decision to settle India's oil dues in euros."

Pointing to other changes in new contract terms, Qamsari added that cost, insurance and freight contracts, where the seller pays the cost of insurance and transport of goods to the destination, has shifted to free on board contracts.

"The buyer will have to take care of transportation costs, yet as long as Indian enterprises cannot provide their oil tanker with appropriate insurance, NIOC will keep giving them its previous services," he said.

Underscoring the fact that NIOC has reached new agreements with some Indian refiners like Essar, Mangalore and Reliance to boost oil sales, the NIOC official said, “The Persian Gulf state's oil sales and export volume to South Korea and India have witnessed a considerable rise in the post-sanctions era.”

On the precise amount of oil export to India, he said the exact figures are not clear, but compared to the sanctions era, it has experienced a 20% rise.

According to Qamsari, under the sanctions regime, Iran was allowed to export only 1 million barrels of oil per day whereas the strategic commodity's export has currently exceeded 2 million barrels per day.

  Settling Dues Via EIH Bank

India's Minister of Petroleum and Natural Gas Dharmendra Pradhan recently said New Delhi is determined to settle its pending oil debt amounting to $6 billion to Iran.

"Our central bank will discuss terms with the CBI. There will be a mutual mechanism for repayment," he said.

According to a current report by Reuters, Indian refiners have turned to State Bank of India and Germany-based bank Europaeisch-Iranische Handelsbank AG to expedite payment of billions in Iranian oil dues they still owe to Tehran, after delays in another money route.

The first payments were handled in May by state-run Union Bank of India via Turkey's Halkbank, which had previously handled payments before tougher European sanctions were put in place in February 2013.

A senior official at the Union Bank of India confirmed that his bank was no longer handling Iran oil payments, declining to provide further details. No comment was available from Turkey's Halkbank and EIH did not immediately respond to a request for comment.