Mumbai: Indian refiners, seeking to end an impasse over payments for Iranian crude oil, have opened accounts with state-owned Union Bank of India to route money through a lender in Turkey, two people with direct knowledge of the matter said.
The step is an experimental option, the people said, declining to be identified because they aren't authorised to speak to the media. Mangalore Refinery and Petrochemicals Ltd, Essar Oil Ltd and Hindustan Petroleum Corp are among the refiners that opened the accounts, one of the people said. They didn't reveal the name of the Turkish bank.
Indian and Iranian officials are discussing whether the payment route through Turkey can be made permanent and may reach an agreement by today or tomorrow, the people said.
An accord may end a gridlock that has threatened $9.5 billion (Dh34.9 billion) in annual oil trade between the two countries. Iran is under international sanctions over its nuclear programme and punitive measures include curbs on financial transactions with the Arabian Gulf country, which made it difficult to find banks willing to transfer oil payments.
S.C. Kalia, executive director at Mumbai-based Union Bank, didn't return three calls made to his office seeking comment. U.K. Basu, managing director of Mangalore Refinery, didn't answer two calls made to his mobile phone.
S. Roy Choudhury, chairman of Hindustan Petroleum, didn't return two calls made to his office. Manish Kedia, a spokesman for Essar, declined to comment on the company's plans to pay for Iranian oil.
India is considering paying Iran for crude supplies through a bank in Turkey and is keeping other options open, oil minister S. Jaipal Reddy said in New Delhi yesterday.
Some Indian refiners sought additional crude from Saudi Arabia, anticipating a halt to Iranian supplies next month.
Crude exports
Iran may stop crude exports to India starting August 1, the state-run Fars news agency reported on July 18, citing an unidentified Oil Ministry official. The country hasn't issued crude export permits to India for August, Fars said then.
India owes $5 billion for oil cargoes, Iranian Central Bank Governor Mahmoud Bahmani said on July 18, according to the Islamic Republic news agency.
Mangalore Refinery and Petrochemicals, the biggest Indian buyer of Iranian crude, said supplies may not be a problem. The refiner, which owes Iran $2.9 billion, expects a solution to the payments issue by this weekend, managing director Basu said last Tuesday.
The Reserve Bank of India, the nation's central bank, dismantled a mechanism to pay for oil in euros and dollars on December 27 last year.
