UPDATE 1-Iran uses euro open credit lines to buy fuel-source
DUBAI Jan 14 (Reuters) - Iran is using open credit lines settled in euros to finance fuel imports after some international banks stopped guaranteeing its deals due to U.S. pressure, an oil industry source said on Monday.
French banks BNP Paribas (BNPP.PA) and Calyon (CAGR.PA) stopped offering letters of credit (LCs) last year for oil sales to Iran because of political pressure from the United States over Tehran's nuclear programme, industry sources have said.
Without the LCs, Indian refiner Reliance (RELI.BO) halted sales of gasoline and diesel to Iran. But other sellers continued to deliver fuel to Iran using the open credit lines, the industry source said on Monday.
"The state oil company has negotiated open credit lines with sellers," he said. "LCs are no longer needed."
State company NIOC has set up the credit lines on behalf of its trade and financing arm, the Swiss based Naftiran Intertrade Company (NICO), he said. An Iranian official was unavailable to comment on Monday.
Iran was paying for the fuel purchases through the credit lines in euros to avoid U.S. scrutiny of the transactions, the industry source added.
U.S. and United Nations sanctions over Tehran's nuclear programme have targeted Iranian banks, while international banks have come under pressure not to deal with the world's fourth largest oil exporter. The United States suspects Iran's nuclear programme aims to develop nuclear weapons, a charge Tehran denies.
The OPEC member has purchased 12 cargoes of gasoline of around 35,000 tonnes each for January delivery, another industry source said. Of those, Swiss-based trader Vitol will deliver five cargoes, he added.
Vitol has been the biggest suppliers of gasoline to Iran, handling about 60 percent of its petrol imports, according to trade sources. It ended a long-running contract to provide fuel to Iran this year after losing money on the deal, an industry source said last month.
Despite its huge oil reserves, Iran depends on imports of gasoline and other fuels as it lacks the refinery capacity needed to meet domestic demand.
Iran has had a gasoline rationing scheme in place since the middle of last year as it looks to reduce its dependence on imports, but it has been forced to step up overseas purchases of gas oil this winter as it runs short of fuel for home heating.
(Additional reporting by Ikuko Kao in London)
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