New Delhi: Government on Wednesday said it will explore all options to increase import of crude oil from Iran

within the
framework of UN sanctions.
"We are exploring the possibility within the overall UN sanctions. Without violating the sanctions to the extent that we can
push oil import from Iran, that is being explored by the Oil Ministry," Economic Affairs Secretary Arvind Mayaram told
reporters here.
India, which paid about USD 144.29 billion last fiscal for importing oil, is renewing imports from Iran as unlike imports from
other countries it pays the Persian Gulf nation in rupees.
Oil Minister M Veerappa Moily has recently written to Prime Minister Manmohan Singh saying India could save over USD 8.5
billion in foreign exchange this fiscal by increasing crude oil imports from Iran.
"About 2 million tonnes crude oil has been imported from Iran so far during the current financial year. An additional import of
11 million tonnes during 2013-14 would result in reduction in forex outflow by USD 8.47 billion (considering the international
price of crude oil at USD 105 per barrel)," Moily wrote.
The plan is in response to Prime Minister's call to the ministry seeking USD 25 billion cut in oil import bill to narrow the
current account deficit (CAD).
India, which last fiscal imported 13.1 million tonnes of oil from Iran, has been, since July 2011, paying in euros to clear 55
percent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 percent due amount was remitted
in rupees in accounts Iranian oil company opened in Kolkata-based Uco Bank.
Payments in euro through Turkey ceased from February 6 2013 and now Iran is paid only in rupees. Rupee payment helps
save foreign exchange outgo, thereby reducing CAD.

Crude Imports: India must trade more

with Iran to contain rupee crisis
By Rajeev Jayaswal, ET Bureau | 13 Sep, 2013, 04.31AM IST
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Tehran offered to sell crude to refiners in Indian rupees,

extend 90-day interest-free credit and not complain about late payments.

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New Delhi has always affirmed that India does not seek a waiver from any country or group of countries on unilateral
sanctions on importing Iranian crude. The Indian government told Parliament on several occasions that it was bound
by UN sanctions, and that unilateral sanctions either by the US or the European Union do not impact its legitimate
trade relations with Iran. But the figures say otherwise.
India's crude oil imports from Iran are shrinking gradually. The tacit reason is US pressure. That fact is evident from
US Secretary of State John Kerry's announcement, three months ago. He said India qualified for an exception from
(US-imposed) sanctions because it substantially reduced import of Iranian crude.
Thanks to this small mercy from big brother, we managed to import little more than 14 million tonnes of good quality
Iranian crude in the previous financial year. But it was substantially low compared to about 22 MT we imported from
Iran five years ago.
Is friendship of certain paranoid western nations so important that India should sever all historical ties with Iran? Fine,
in this materialistic world, emotions have no place. But what if material gains are for real?
Tehran is willing to treat its old trade partner very favourably. It has offered to sell crude to refiners in Indian rupees,
extend 90-day interest-free credit and not complain if payments are held up because of insurance or shipping
hassles, which are mainly created by European banks and insurance companies.
Can India afford to ignore this offer? It had imported 185 MT crude oil worth $144 billion last year. Even if the demand
is contained at that level, a deteriorating rupee against the US dollar is expected to raise our oil import bill by at least
10-15%. Is it not prudent to raise imports of Iranian crude and pay in rupees?

According to oil minister Veerappa Moily, India plans to import 13 MT of crude in the current financial year and save
$8.5 billion in valuable foreign exchange. Can't it be raised to 22 MT, as it was five years ago? This will certainly help
to contain our currency crisis. But besides Uncle Sam, there could be other practical problems.
The first is expected from Tehran itself. It will act pricey, knowing that the old friend is in real trouble. This is expected
because the warmth was long lost as India chose that path. Iran was eager to engage with India until recently.
This writer remembers an informal conversation with Iranian oil minister Gholamhossein Nozari in Riyadh during the
third Opec summit six years ago. He accosted Indian journalists at the cultural event organised by the host, Saudi
Arabia. He asked for our help to convince the Indian government that Iran was more than willing to meet India's
growing energy needs.
He offered oil and gas blocks, LNG and natural gas through the proposed Iran-Pakistan-India (IPI) pipeline. But it was
a period when India was awestruck by the US and journalists had other pressing issues to pursue.

Crude Imports: India must trade more

with Iran to contain rupee crisis
By Rajeev Jayaswal, ET Bureau | 13 Sep, 2013, 04.31AM IST
23 comments|Post a Comment
21
inShare5
Share More

READ MORE ON trade relations | Tehran | oil import bill | Iranian crude | Indian Government

Tehran offered to sell crude to refiners in Indian rupees,

extend 90-day interest-free credit and not complain about late payments.

Editor's Pick

How to build your 'wealth' in six simple steps

Mind your driving habits to avoid wasting fuel

It pays to be prepared during uncertain times

Financial crisis: Six biases to avoid in a downturn

Ray Dolby, sound pioneer who founded Dolby Laboratories, passes away

ET SPECIAL:
Get latest Dollar price updates on your mobile

Veerappa Moily understands the importance of Iran, especially because refiners have told him they save about $2 a
barrel when they process Iranian crude. "Earlier, it was an engagement with Iran. Now, the situation has changed
from engagement to serious engagement," he says. But why should that be limited to crude oil? If the transnational
Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline can be laid, what stops the IPI project? America! Will it meet
our energy needs? Will it help us in managing our currency crisis? No, big brother believes in laissez-faire. Thus,
India should not follow the self-styled global leader blindly.
It must realise the robustness of its economy is dependent on its energy security. It should firmly follow its stated
diplomatic stand that it believes in UN sanctions and not sanctions of an individual country or group of countries.
Sanctions-hit Iran is still looking at India for help because its oil exports have reduced by half from about 2.2 million
barrels per day in the presanction days. There is a need to evolve strategies to overcome challenges in importing
Iranian crude. India can help in forming a group of like-minded countries that may trade in the rupee to reduce
dependence on the dollar.

The Hindu Oil Minister M Veerappa Moily. File photo: R. Eswarraj

TOPICS
World
India

Iran

economy, business and finance

energy and resource

energy and resource

oil and gas - downstream activities

oil and gas - upstream activities

macro economics
imports

India plans to save over $8.5 billion in foreign exchange this fiscal by increasing crude oil
imports from Iran, Oil Minister M. Veerappa Moily has told Prime Minister.
India, which paid about $144.29 billion last fiscal for importing oil, is renewing imports from
Iran as unlike imports from other countries it pays the Persian Gulf nation in rupees.
Detailing plans to save $20 billion in foreign exchange spending, Mr. Moily on August 30 wrote
to Prime Minister Manmohan Singh saying about 11 million tonnes of crude will be imported
from Iran in the remainder of the fiscal.
About 2 million tonnes crude oil has been imported from Iran so far during the current financial
year. An additional import of 11 million tonnes during 2013-14 would result in reduction in forex
outflow by $8.47 billion (considering the international price of crude oil at $105 per barrel), he
wrote.
The plan is in response to Prime Ministers call to the ministry seeking $25 billion cut in oil
import bill to narrow current account deficit.

Mr. Moily, who also wrote an almost identical letter to Finance Minister P. Chidambaram, said
he has worked out some concrete measures which could result in a saving of around $19-20
billion in the current financial year.
The biggest component of the plan is restarting import of oil from Iran. As US and western
sanctions blocked all payment routes, India pays Iran in rupees in a Uco Bank branch in Kolkata.
Other measures include asking state-owned oil firms to keep crude imports at 2012-13 level of
105.96 million tonnes that will save $1.76 billion in foreign exchange.
Also, a mega fuel conservation campaign to limit fuel consumption growth to last years 4.1 per
cent will save another $2.5 billion, he said.
The plans outlined by Mr. Moily are part of governments efforts to prop up the rupee, which has
slipped 23 per cent against the US dollar this fiscal.
India, which last fiscal imported 13.1 million tonnes of oil from Iran, has been, since July 2011,
paying in euros to clear 55 per cent of its purchases of Iranian oil through Ankara-based
Halkbank. The remaining 45 per cent due amount was remitted in rupees in accounts Iranian oil
company opened in Kolkata-based Uco Bank.
Payments in euro through Turkey ceased from February 6 this year and now Iran is paid only in
rupees. Rupee payment helps save foreign exchange outgo, thereby reducing CAD.

India had 43.8 trillion cubic feet of natural gas reserves at the end of 2012, mostly
located offshore. The two biggest state-owned oil companies, ONGC and Oil India,
dominate the country's upstream gas sector.
Overview data for India
+ EXPAND ALL
Petroleum (Thousand Barrels per Day)
History
Total Oil
Production
Crude Oil
Production

Previous Year
India

Asia &
Ran
World
Oceania
k

Consumption
(1980-2012)

India

995.81 8,940

87,44
21
4

990.18

782.34 7,629

74,14
24
1

776.97

(1980-2012)

(1980-2012)

Latest
Year

3,410.
88,54
28,441
4
54
9

3,621.75

Petroleum (Thousand Barrels per Day)

Estimated
Petroleum Net
Exports

(1980-2012)

Refinery
Capacity

(1980-2012)

Proved
Reserves(Billio
n Barrels)

(1980-2013)

Latest
Year

Previous Year
2,414. -19,500 -74

-2,631.57

4,000 24,875

88,09
5
7

4,043

5.61

NA

5.48

42

21