India signals long-term partnership with Iran....

India signals long-term partnership with Iran in trade and doubles Oil imports from Tehran....

http://www.indianembassy-tehran.ir/

India figured as Iran’s number one crude oil customer in January. That may be difficult to believe but it is indeed a statement of fact. Actually, India stepped up its imports of Iranian oil by 37.5 percent, which helped Iran offset a 50 percent cut in Chinese purchases resulting from a dispute in pricing. China now imports around 250000 barrels a day as against India’s 550000 barrels a day, according to a Wall Street Journal report.

Of course, what stands out is that New Delhi’s Iran policy is crystallising. India will concentrate on its self-interests in a highly fluid regional security scenario without in the least being ideological about the winds of change blowing through that region. This is the message one gets. Indeed, the US-Iran standoff is primarily geopolitical and it doesn’t concern India, which is in any case not in the business of ‘regime change’.

In all probability, Washington too will eventually get to see the futility of this standoff and will move toward engaging Tehran. Despite the western rhetoric, the fact remains that sanctions against Iran failed to work through the past 30 years. Even a noted Iran-baiter like French president Nicolas MOSSAD Sarkozy is warning that a military strike against Iran serves no purpose.

Now, coming back to India’s oil imports from Iran, Washington will continue to dissuade Delhi from trading with Tehran. The US state department spokesperson told reporters Tuesday that the talks with the visiting Indian foreign secretary in Washington included “how India might find alternative sources… This is a two-track policy, both to encourage countries to wean themselves from Iranian oil, but also to work with suppliers around the world to help countries find alternative sources of supply.”

However, what Washington overlooks is that India’s economic relationship with Iran as such is also at stake here. Without oil imports, India-Iran trade virtually packs up. Delhi’s robust efforts to work out a reliable payment mechanism for the trade with Iran underscores that it intends to not only sustain the present level of trade but do all it can to boost the trade by stepping up India’s exports to Iran. The government is mounting a “huge” business delegation to Iran in end-February to explore the opportunities for tapping those sectors that are being vacated by the western countries following their embargo against Iran. It is a long-term approach that India is adopting, keeping in view the fact that Iran is a rich country potentially which offers a big market for India’s exports.

The new payment mechanism — providing for 45% of Iranian oil to be settled for in Indian rupees — opens up interesting possibilities. Of course, Iran has the option to leave the money in the Indian state-owned UCO Bank at an interest rate of 4% or so. But to obviate currency risks, Iran may perhaps prefer to use the money to import from India or to use India as a trading hub to buy from third countries. Iran also can invest the money in Indian bonds or equities, which Delhi might welcome. In sum, the payment mechanism acts as a catalyst to build up the momentum of economic ties as well as broadening and deepening the partnership.

By M K Bhadrakumar

By BENOÎT FAUCON

India increased its imports of Iran’s oil to become its largest customer last month, partly offsetting a cut in Chinese purchases, as sanctions failed to significantly dent Tehran’s sales, people in the oil industry said.

Iranian crude exports to India rose to 550,000 barrels a day in January, up 37.5% from December. That coincided with a 50% cut in exports to China, the result of a pricing dispute. Indian officials declined to comment.China now imports around 250,000 barrels a day from Iran.

Some analysts question, however, whether India can keep Iranian oil imports at such levels.

“I don’t think India is insulated at all” from sanctions, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group. “So the question is just how long Tehran is willing to sell on credit and how long Tehran can go without hard currency.”

Iran has been more flexible than other suppliers to India when it comes to payments, and accepted a delay on billion of dollars of arrears after sanctions disrupted payments last year.

Many Indian refineries are geared toward Iranian oil, making it more straightforward and cheaper to refine. There is no sign India is getting Iranian oil at a discount.

Despite a pledge to find alternatives, South Africa has also increased its Iranian oil imports to 100,000 barrels a day, a person familiar with the situation said. South African officials declined to comment.

Overall Iranian crude exports remained steady in January, preliminary data show.

Iranian crude shipments to the European Union eased slightly, as refiners prepare for an embargo on Iran. Iranian officials say the embargo won’t affect the country because they can find other buyers.

That comes despite rising financial pressure on Iran and on other nations to stop buying its oil. The U.S. has sanctioned Iran’s central bank and is working to cut the country off from the network of international financial transfers, the conduit for oil revenue, and pressured Asian and African nations to reduce their Iranian oil imports alongside the EU embargo.

But sanctions haven’t yet deterred India. Iran’s ambassador to India, Sayed Mehdi Nabizadeh, said on Tuesday that India had agreed to pay for some purchases of Iranian oil in Indian rupees, a route that would avoid the risk of an interruption in banking transfers. Officials in India’s oil and external ministries declined to comment on reports of a deal.

Final figures for shipments to Europe—which include the EU and Turkey—fell by 7% in January to 650,000 barrels a day, according to a person in the oil industry familiar with the matter. Earlier, preliminary numbers pointed to a steady 700,000 barrels a day last month.

But direct deliveries—outside the SuMed pipeline—to Greece fell by 25,000 barrels a day to 85,000 barrels a day, the person said.

http://articles.economictimes.indiatimes.com/2012-02-09/news/31042084_1_india-and-iran-eu-sanctions-total-oil-imports