Indian team to visit Iran to discuss oil payment mechanism

The team will discuss restarting of payments in foreign currency

India will shortly send a delegation to Iran to discuss oil payment mechanism after the historic accord between western super powers and the Persian Gulf state made it easier to import crude oil.

 

The multi-disciplinary team comprising officials from the finance ministry, central bank, petroleum ministry and oil refiners will visit Tehran shortly to discuss restarting of payments in foreign currency, Oil Secretary Vivek Rae said today.

 

The easing of sanctions following a deal on Sunday to curb Tehran's nuclear programme may reopen the channel to pay for Iranian oil in euros, while European Union lifts ban on insuring tankers carrying oil from the Persian Gulf state.

 

"This (fiscal) year, we had planned 11 million tonnes of crude oil imports from Iran and we will stick to that. Because it is not easy to keep changing your contracts on short notice and (raising volumes) would mean bringing in more ships and other arrangements," he told reporters on the sidelines of a CII event here.

 

He said India will import more crude oil from Iran once all sanctions are lifted. "Iran is a great source of oil and gas and once problems faced by Iran are resolved, we will have more oil and gas from Iran."

 

Also, lifting of sanctions would mean more oil from Iran will come into market and thereby easing prices, which is good for a nation like India that is 75% dependent on imports to meet its requirements, he said.

 

"The sanctions (easing) will be worked out over the next six months. We have to see how the policy regime changes and we will calibrate our decision for the next year based on that. If sanction gets lifted and issues get resolved, we can go back to (importing) 21 million tonnes but that is something for the future," he said.

 

Over the past few years, India has cut imports from Iran from 21 million tonnes to about 18 in 2011-12 and to 13.1 in 2012-13. This year imports are planned at 11 million tonnes.

 

Rae said if the sanctions against Iran are lifted there will be no need for setting up an insurance fund.

 

After European re-insurers refused to provide cover for refineries processing Iranian crude oil and shipping lines transporting Iranian oil, the government began a process to set up a Rs 2,000 crore insurance fund to provide cover.

 

"If issues get resolved, you don't need insurance fund because insurance cover will be available for the oil refineries (processing Iranin oil) and shipping companies (transporting Iranian oil)," he said.

 

He, however, said the idea has not been put on hold yet and inter-ministerial talks are the issue are on.

 

"An Indian delegation is likely to visit Iran shortly to discuss these issues," he added.