India ready to pay off US$6.5 billion Iranian oil debt
India is eager to step up their engagement with Iran in the hydrocarbon sector and so, has conveyed its intention to clear nearly US$6.5 billion of the dues for oil import from the Persian Gulf nation at the earliest, provided there was clarity on payment channel.
Ahead of Indian Prime Minister Narendra Modi’s visit to Tehran later this month, there has been a series of discussions at various levels both in Tehran and New Delhi and both sides were confident of resolving the issue soon, according to government sources.
Following lifting of sanctions against it in January under a historic nuclear deal, Iran had terminated a three-year-old system with India of getting paid for half of the oil dues in rupees and has been insisting on being paid in euros for the oil it sells to Indian refiners.
Iran has also scrapped free delivery of crude oil to Indian refiners. Officials said that even though the Western sanctions against Iran were already lifted, problems still persist in banking channels due to which regular transactions were not possible yet.
Refiners like Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MPRL) owe nearly US$6.5 billion in dues to Iran. Since February 2013, Indian refiners like Essar Oil and MRPL paid 45% of their import bill in rupees to UCO Bank account of Iranian Oil Company. The remaining has been accumulating, pending finalization of a payment mechanism.
Petroleum Minister Dharmendra Pradhan and External Affairs Minister Sushma Swaraj had visited Iran last month during which they had conveyed to Iranian leaders that India wants to significantly ramp up engagement in oil and gas sector with that country. The issue of the pending dues had also figured in the meetings.
Swaraj has communicated to Iranian leadership during her visit that India wants to invest in joint ventures in oil and gas sectors in the Persian Gulf nation where foreign investors from major economic powers are rushing in to get early footholds after lifting of sanctions.
Following lifting of sanctions against Iran, India has been eying deeper energy ties with that country and has already lined up US$20 billion as investment in oil and gas as well as petrochemical and fertilizer projects there.
New Delhi is looking to increase engagement with the sanction-free Iran by raising oil imports and possible shipments of natural gas. It also wants rights to develop Farzad-B gas field in the Persian Gulf discovered by OVL.
A deal for the field was not signed during Pradhan’s visit as Iranian Parliament, Majlis, is yet to approve the new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium.
Source: NDTV