India to make May-July oil payments to Iran - sources

NEW DELHI Wed Apr 23, 2014 8:59pm IST

A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata November 27, 2013. REUTERS/Rupak De Chowdhuri/Files

A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata November 27, 2013.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - India is set to pay Iran $1.65 billion over the next three months under an interim nuclear deal that eases sanctions on Tehran and gives it access to $4.2 billion in blocked funds, four sources with knowledge of the matter said.

As long as Tehran complies with the terms of its preliminary agreement with western powers, which took effect on Jan. 20, Iran receives some of its funds frozen abroad in eight payments from various buyers over six months.

Iran has cut its most sensitive nuclear stockpile by nearly 75 percent in implementing the pact, the International Atomic Energy Agency said in its latest report, as the OPEC member allays fears about its atomic aims.

This means Tehran will have access to the next two installments, each of $550 million, which are due on May 14 and June 17. The final $550 million installment, due on July 20, is contingent on confirmation that Iran has fulfilled all of its commitment.

The Indian government has asked refiners to make the first payment by mid-May, three of the sources said, adding that refiners will settle all three tranches if payment is allowed by the United States and European Union.

"The individual companies' share is to be worked out," one of the sources said.

Iran has so far received $2.55 billion in frozen oil funds, in five payments, four from Japan and one from South Korea.

OMANI RAIL

Three of the sources said Iran had asked India to make payments into the Central Bank of Iran's account with Oman's Bank Muscat BMAO.OM in Omani rails.

"All I can confirm is that some movement is happening on payments by India to Iran, but the modalities as to which bank will be used by India to remit funds is yet to be worked out," said a western diplomat privy to the matter, who was not one of the four previously cited sources.

Indian refiners Essay Oil (ESRO.NS), Bangalore Refinery and Petrochemicals Ltd (MRPL.NS), Hindustan Petroleum Corp (HPCL.NS) and HPCL-Mittal Energy Ltd together owe $3.6 billion to National Iranian Oil Co.

The tough sanctions slapped on Iran in 2012 closed banking channels for the transfer of oil payments to the OPEC member country, putting a stranglehold on its revenue, crippling its economy and ultimately bringing it to the negotiating table.

Indian buyers of Iranian oil have been settling 45 percent of payments in rupees, which Iran used for importing goods from India, while the refiners held the remainder.

Before the interim deal, countries that imported Iranian oil were required to steadily reduce their purchases to qualify every six months for a waiver from U.S. sanctions.

IMPORTS SLASHED

Iran's crude oil exports fell for the first time in five months in March and are slated to drop further in April, moving closer to the levels stipulated by the November interim deal.

That agreement allows Iran to keep exporting at current reduced levels of about 1 million bpd and opens a door for lifting shipment volumes later.

Iran's top four oil clients - China, India, Japan and South Korea - together cut oil imports from Iran by 15 percent to an average of 935,862 barrels per day (bpd) in 2013, government and industry data showed.

India's intake of Iranian oil surged nearly 43 percent in the first quarter of 2014, bringing a warning from the United States that it needed to hold the shipments closer to end-2013 levels of 195,000 bpd.

(Reporting by Nidhi Verma; editing by Jane Baird)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Economic Pulse

REUTERS SHOWCASE

Political Pulse

Political Pulse

100 days of Modi: Good for business, not so good for marginalised groups.  Full Article 

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Best Economy

Best Economy

Swiss economy most competitive once again; EU, U.S., Japan improve.  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage