Iran-India oil trade dispute 'solved' - UPDATED

Iran said an oil trade dispute with India had been settled by changing the currency for payments.

Iran-India oil trade dispute 'solved' - UPDATED

Iran said an Friday that an oil payments dispute with India had been resolved by changing the currency of settlement, according to the country's semi-official Fars news agency.

Central bank officials from Iran and India were meeting in Mumbai in an effort to keep their oil trade running.

"By changing the currency for oil transaction between Iran and India the problem was solved," Deputy Oil Minister Ahmad Khaledi was quoted as saying by Fars news agency.

A spokeswoman with the Indian central bank did not have immediate comment.

Indian officials and traders were hopeful of a quick resolution to the payments row that could disrupt about 13 percent of its oil imports and leave refiners scrambling for expensive alternative sources of crude.

Last week, the Reserve Bank of India said deals with Iran must be settled outside the Asian Clearing Union (ACU) system, used by central banks of member nations to settle bilateral trades. The ACU includes the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.

Analysts predicted talks would be tough and that New Delhi may face a costly bill if it abandons Iranian oil imports.

The United States has pressed hard for governments and companies to stop dealing with Tehran.

India is the biggest buyer of Iranian crude among ACU members, with state-owned refiners and privately owned Essar Oil taking around 400,000 barrels per day.

"We are extremely hopeful that this impasse will be resolved shortly as Indian companies every week get crude supplies from Iran," B. Mukherjee, head of finance at state-run Hindustan Petroleum Corp , told Reuters earlier.

Other importers of Iranian crude include state-run Indian Oil Corp and Mangalore Refinery and Petrochemicals Ltd and privately-run Essar Oil .

U.N. sanctions on Iran do not cover oil sales.

"Alternatives"

India and Iran could agree to settle deals in Iran's rial or another currency such as the Japanese yen, Indian Oil Secretary S. Sundareshan suggested on Thursday.

South Korea pays for Iranian crude using the won.

Payments could also be routed through a third-country central or commercial bank.

An economy growing at about 9 percent a year has made India the world's fourth-largest importer of crude. Iran is its second largest supplier after Saudi Arabia.

Indian oil importers get 90 days credit for payment so they are covered for old transactions, but future shipments would be in jeopardy if the matter had not been resolved.

India buys about 400,000 barrels per day of Iranian crude, sending roughly $12 billion a year to Tehran via the Asian Clearing Union, a system created in the 1970s by central banks in South Asia and Iran to clear trade payments between them.

Agencies


Related news reports:

Last Mod: 31 Aralık 2010, 14:31
Add Comment