India has offered to step up crude oil imports from Iran as soon as sanctions imposed by the West are lifted early next year.
The offer was made at a high-level meeting in New Delhi on Monday between foreign minister Sushma Swaraj and Iranian Minister of Economic Affairs and Finance Ali Tayyebnia.
According to sources, payment channels for oil shipments, which are partly blocked now, will be opened next year, allowing for higher imports from Iran.
The Islamic Republic supplied 6.5mn tonnes of crude oil to India in H1 2015.
“Iran offers 90-day credit and free shipping, which makes Iranian crude attractive for Indian refiners,” a source said.
Currently, India pays 45% of the import bill in rupees. The remaining, which is to be paid in euros, is blocked on account of the restrictions on financial institutions dealing with Iran. This amount will be paid once channels open.
Sanctions are expected to be lifted in January. On 20 July, Iran reached an agreement with the US, the European Union and the UN, accepting long-term restrictions on its nuclear programme in return for lifting of trade and financial sanctions.
“The amount of extra crude to be purchased from Iran would depend on the terms offered,” the person said.
The mix of crude Indian refiners import (Indian basket) has now fallen to a decade low of $33-34 a barrel and a further decline in price appears likely.
Refiners source about 10-20% of their requirement from global spot markets to take advantage of falling prices.
Swaraj and Tayyebnia discussed the prospects of boosting oil trade at the India-Iran Joint Commission meeting in New Delhi. The Iranian minister also met Indian Prime Minister Narendra Modi to discuss cooperation between the nations on oil and gas, investment and connectivity on Monday.
Indian refiners importing Iranian crude — Mangalore Refinery and Petrochemicals Ltd (MRPL) and Essar Oil — are likely to bargain hard considering the downward pressure on crude prices.
