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India makes its way to pay for Iranian oil despite US sanctions

2018/12/17 10:25

 

By Kamlesh Trivedi

The Indian government early in December signed a formal Memorandum of Understanding (MoU) with Iran for payment against import of oil from Iran. According to the MoU, Indian oil companies will use a state-owned National Iranian Oil Company (NIOC) account with India’s UCO Bank to make payment for oil import. Indian state-owned refining companies, Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) importing Iranian oil, will deposit payment to the NIOC account with UCO Bank. Iran will be allowed to use half of the fund deposited by Indian refiners to pay for food, medicine and medical equipment imported from India.

India and seven other countries have been granted 180 days of exemption from the US sanctions against Iran. As part of the deal, against the exemption granted by the US, India has agreed to cut its oil import from Iran and make payment through an escrow account in Indian rupee. India is allowed to import 300,000 barrels per day of oil from Iran against its average import of 560,000bpd of Iranian oil.

India, which is the second biggest importer of Iranian oil after China, had to cut down its import since the sanctions came in force from Nov 5. Leading private-sector importers, Reliance Industries Ltd (RIL) and Essar Oil, stopped importing Iranian oil almost completely even before the US sanctions came in force.

India had entered a similar payment arrangement with Iran during previous US sanctions and successfully imported Iranian oil. Iran remains the third largest supplier of oil to Indian companies after Saudi Arabia and Iraq. 

 

 

India : Energy Desk  Kamlesh Trivedi  +91-98795-50717
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