April 11, 2011 / 11:21 AM / 7 years ago

Iran econ minister says India oil payment row solved

TEHRAN (Reuters) - Iran’s economy minister said on Monday a dispute with India over payments for Iranian crude oil had been resolved, the semi-official Fars news agency reported.

In a wide-ranging news conference, when asked about the dispute, Shamseddin Hosseini said: “About the payment for oil bought from Iran by India, a problem was created for a bank by the German central bank, which has been solved by negotiations with Indian and German officials.”

The problem of how India pays for the 9 billion euros ($12.96 billion) worth of Iranian crude it imports annually emerged in December when the Reserve Bank of India scrapped a long-standing payments mechanism, a move welcomed by Washington which has lent on governments around the world to squeeze Iran on which it has imposed tight economic sanctions.

In a move to break the impasse, a Hamburg-based bank handling international trade for Iranian companies, EIH, stepped in to handle the payments via Germany. But in early April that payment route was stopped, with one German newspaper saying Chancellor Angela Merkel had instructed the Bundesbank to stop clearing payments from India headed to EIH.

German officials have denied that Merkel had exerted pressure at home or abroad to end the payment scheme.

As recently as last Thursday, Indian officials said no new solution had been found.

Iranian news agency reports of Hosseini’s news conference gave no further details about the solution he said had been found.

India’s imports of about 400,000 barrels per day of oil from Iran have continued despite the lack of payments, on undertakings from state-run oil companies which are long-standing customers.

Asia’s third-largest oil consumer imports over two-thirds of its oil needs and depends heavily on volumes from the Middle East to power its economy, which is growing around 9 percent per year.

Reporting by Hossein Jaseb and Mitra Amiri; Writing by Robin Pomeroy; editing by James Jukwey

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