India eyes more Iranian oil.

India is exploring ways to increase crude oil supplies from Iran without attracting U.S. sanctions.
 
The current waiver granted to India by the U.S. is set to expire in December and any further extension is largely dependent on how far business with Iran has been contained.
 
A senior Government official told Business Line that, “It was decided in the meeting of senior officials held recently that it was necessary to increase oil imports from Iran as payment for it is made in rupee and we get to save precious foreign exchange. But, it can only be done if it is legally possible.”
 
At present, the legal tenability of buying more Iranian crude oil during the fiscal without affecting other commercial relations (U.S.) is being examined by the External Affairs Ministry’s legal & tender department. The U.S. could allow higher imports this year since there was sharp drop in crude sourcing from Iran last year, the official said.
 
“It all depends on how the term ‘gradual reduction’ is interpreted. The other countries that had been granted waiver by the U.S. have reduced their annual purchase by about 15 percent,” the official said.
 
Countries dependent on Iranian oil such as India, China and Japan, were given the first round of waiver in June last year on the condition that they gradually reduce their purchases from the Gulf country. This was further extended till end of this year.
 
While the Government is exploring this aspect, domestic oil refiners feel that India would need to resolve the insurance issue to enable them to purchase more from Iran. “Supply is not an issue, but it is lack of insurance cover which is affecting imports from Iran,” said one of the domestic refiners.
 
If the Government wants supplies to increase then it has to resolve the insurance issue, the refiner added. Western sanctions do not prevent Indian insurance companies from providing cover, but they depend on reinsurance from the Western companies, because of the high risks involved.
 
The sanctions discourage global re-insurers from taking on the risk.
 
To resolve this, the Government is putting in place an insurance fund. The Fund is yet to become operational.
 
India pushes Iran to accept rupee for all crude oil
 
The Indian department of commerce under the ministry of commerce and industry has asked Iran to accept payment for crude oil imports by India entirely in rupees or face the risk of losing its biggest client. India currently pays 55 percent of its crude oil purchases from Iran in rupees and the rest in euros.
 
“We are pursuing them (Iran) to accept 100 percent (payment) in rupees; they are pondering over it. They will have no other option. We have also told them that either they go for the option or we might have to look for other options,” a senior commerce department official told Business Standard, indicating India might look at increasing its crude oil purchases from other markets such as Venezuela.
 
India exports rice, cereals, pharmaceutical products, machine tools, automobile parts and steel to Iran, all of which are permitted under the U.S.-imposed sanctions. Hence, the department has urged Iran to buy these items with rupee it is obtaining from selling oil.
 
According to the official, the government was expecting some warming up of relations between Washington and Teheran during the visit to Iranian President Hassan Rouhani to the U.S. last month to attend the UN General Assembly meet where he was expected to meet U.S. President Barack Obama. However, nothing fruitful emerged except for highly-publicized phone call between both the leaders, while sanctions remained intact.
 
Since July 2011, India had been making payments in euro through Ankara-based Halkbank until February this year. While euro payments through Turkey are stuck, rupee payments continue to be made on the accounts of Iranian National Oil Company through Kolkata-based UCO Bank.
 
India has been pressing for all payments to be made through rupee and the previous regime in Iran had reportedly agreed to take entire payment in rupee. However, the new government under Hassan Rouhani is yet to accept this proposal.
 
“I do not know whether the Iranian government ever said that they were willing to take 100 percent. My understanding is that there is a percentage agreed to between Iran and India in terms of how we will pay for crude and that is 45 percent and 55 percent,” Syed Akbaruddin, spokesperson, external affairs ministry said.
 
Following the U.S. sanctions, India cut its imports from Iran to 13.3 million tons in 2012-13 from 17.4 mt in 2011-12.

Source : tehrantimes.com