* Halkbank route stopped from Feb. 6 - sources
* Finding replacement for Halkbank not easy - source
* Rupee payment may help HMEL in clearing dues - sources
By Nidhi Verma
NEW DELHI, Feb 18 India is now paying Iran only
in rupees for its oil after it lost another payment route in
euros due to tougher sanctions from Feb. 6, sources at local
refiners said, leaving Tehran struggling to use the
tightly-restricted Indian currency.
The rupee is only partly convertible, limiting its
international acceptability, although Iran can use the currency
to buy non-sanctioned goods and services from India.
Turkey's Halkbank had been handling payments for
Iranian oil in euros from India since July 2011 after other
conduits were choked by earlier sanctions, but the latest U.S.
measures effectively prevent this, bankers said.
India is Iran's second-biggest client after China but, the
world's fourth-largest oil importer India has been reducing
imports and so secured a waiver from earlier sanctions that
would have impeded its access to global banking networks.
The European Union and United States are using sanctions to
force Iran to curb its disputed nuclear programme, which the
West believes is aimed at making a bomb but Iran says is for
Sources at two Indian refiners said they received an email
from Halkbank on Feb. 5 that it will not be able to handle
Iranian oil payments from Feb. 6.
"We will not be able to execute your general instructions
issued in July 2011 from the date of Feb. 6, 2013," said one of
the sources, reading out the letter sent by Halkbank.
The second source confirmed receiving a one-sentence email
from Halkbank. "Halkbank is history now," he said.
The tighter U.S. sanctions are also killing off Turkey's own
gold-for-gas trade with Iran.
India had been paying through Halkbank for about 45 percent
of its massive Iranian oil bill since April 2012 with the rest
in rupees. The two nations had been trying to find goods for
Iran to buy from India, to smooth a huge trade imbalance.
India's total exports to Iran in April-September 2012
amounted to $1.4 billion, a quarter of the value of its imports
from Iran during the period, according to Indian government
There have been several visits by trade delegations to try
to boost exports from India, especially of foodstuffs which are
not prohibited under sanctions, but few deals have got off the
ground. Iran has bought sugar from India but attempts to sell
wheat to Tehran have faced quality issues.
The two sides have yet to find another way to settle their
oil trade and Indian refiners are currently retaining 55 percent
of their payments to Tehran.
"In this kind of scenario, do you think it is easy to find
out a new payment mechanism?" asked the first source.
HPCL-Mittal Energy Ltd (HMEL), part-owned by steel tycoon
Lakshmi Mittal may now be able to clear its dues in rupees,
built up after India said it could only pay 45 percent in rupees
and Halkbank refused to open a euro account for the private
HMEL bought a total 4 million barrels of oil from Iran
between September and October 2012.
India plans to reduce imports from Iran by another 10-15
percent in the next contract year starting April 1, sources have
In the first nine months of the contract year 2012/13, India
imported 270,700 barrels per day from Iran, about 7.5 percent of
total purchases by the country, which depends on imports for 80
percent of its oil needs.
(Editing by Keiron Henderson)