India has not faced any problems in paying for crude oil it buys from Iran, but needs to be prepared for all eventualities, Oil Minister S Jaipal Reddy said today.
"We continue to be optimistic. Iran continues to be positive. However we have to be prepared for all eventualities," Reddy told reporters here.
An official said Turkey's Turkiye Halk Bankasi AS, the bank through which India routes payments in euros to Iran for about 370,000 barrels per day of crude oil supplies, has so far not declined to be an intermediary.
"All that they [Turkey] have said is that they would not like to open new accounts but will continue to service existing accounts [through which payments are routed to Iran]," the official said, adding that not a single payment has defaulted since India began using the Turkey conduct in July last year.
US President Barack Obama on December 31 signed into law measures that deny access to the US financial system to any foreign bank that conducts business with the central bank of Iran.
The European Union will discuss imposing harsher sanctions on Iran, including a ban on crude imports, in response to the country's nuclear programme when the bloc's foreign ministers meet at the end of January.
The official said India will continue to buy crude oil from Iran, but would like to replace a part of the supplies with other sources like Saudi Arabia.
Mangalore Refinery and Petrochemicals Ltd, the largest buyer of Iranian oil, at 142,000 bpd, and other refiners are yet to renew their term import contracts with Iran for the year beginning April.
Essar Oil is looking at replacing 10% of the 110,000 bpd of oil it buys from Iran with other West Asian sources.
Yesterday, Foreign Secretary Ranjan Mathai had stated that New Delhi would not seek a waiver from US sanctions to protect its oil trade with Iran.
The US allows waivers for firms in countries that significantly reduce dealings with Iran or when it is either in the US national interest or necessary for energy market stability. Japan, South Korea and Turkey have all said they could seek waivers.
An Indian delegation comprising officials from the RBI, Oil Ministry, Finance Ministry and refiners is currently in Tehran to discuss alternative modes and routes of payments.
Indian refiners began using Halkbank to pay Iran in July last year after the Reserve Bank of India (RBI) scrapped a long-standing mechanism of payment through central banks.
New Delhi fears Turkey may come under pressure to halt the conduit after the US imposed a fresh round of sanctions against Iran, with the European Union slated to announce tough measures of its own in this regard at the end of the month.
Refiners have already begun talks with alternative suppliers to slowly replace some quantity of the 370,000 barrels a day of oil they buy from Iran.
MRPL, the biggest buyer of Iranian oil at 142,000 bpd, has not yet contracted any supplies for the year beginning April.
India is Iran's second-largest crude buyer, taking about 13.5% of Iran's 2.6 million bpd of exports. New Delhi currently pays the world's fourth-largest oil producer about $1 billion every month through Turkey.
Sources said the possibility of paying Iran in rupees or through the yen would be discussed at the meeting in Tehran.
Routing payments through Russia was discussed during the visit of Prime Minister Manmohan Singh to Moscow last month. However, Russia has so far not agreed to route payments for India due to the "complexities" involved.
