19-10-2018

India seeks middle ground with US and Iran as sanctions near

With about two weeks to go before the second round of US sanctions on Iran come into effect, India seems to have worked out an arrangement with both countries to protect its national interests.

India’s foreign ministry spokesman Raveesh Kumar on Thursday described the talks between Indian officials and US special envoy on Iran, Brian Hook, and US assistant secretary of state for energy resources Francis R. Fannon, in New Delhi last week, as “good”.

“We had good discussions...we (India) have conveyed to him (Hook) that the price of crude oil is a matter of concern for the domestic economy and directly impacts the common man,” said Kumar. “We are engaged with all stakeholders on this matter. Our expectations have been made known to the US,” he said.

Kumar said India was appreciative of Mike Pompeo, the US secretary of state, who said the objective of the sanctions that come into force on 4 November was aimed at penalizing Iran and not aimed at India.

Pompeo, however, said Washington would consider waivers on the embargo, but also warned that these waivers would be time-limited, if granted.

Energy-starved India has been worried about the sanctions against Iran coming into effect, given it imports as much as 83% of its crude oil needs.

About 9.4% of the total 220.4 million tonnes of crude oil imported by India in 2017-18 was from Iran.

Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) and a key supplier, especially to refiners in Asia.

India’s official position has been that it does not recognize sanctions that are not imposed by the United Nations.

But given that the US sanctions bar trade and payments to Iran in US dollar, New Delhi was looking at other ways to pay Iran for its oil.

In May, US President Donald Trump said he was pulling the US out of the 2015 Iran nuclear deal, which limited Iran’s nuclear ambitions in exchange for removing joint US-Europe sanctions, which included strict curbs on crude oil exports. He also announced the roll out of sanctions against Tehran, one set of which came into force from August.

A second set that is particularly crippling is to come into effect on 4 November.

It includes measures aimed at its oil and shipping sectors, with a six-month “wind down” period “to allow companies to end contracts, terminate business, (and) get their money out”, according to the US State Department.

The second set of sanctions also target Iran’s “port operators, and shipping and shipbuilding sectors”, besides sanctions on petroleum-related transactions, that is the purchase of petroleum, petroleum products, or petrochemical products from Iran, on the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC). There will also be sanctions on transactions by foreign financial institutions with the Central Bank of Iran, the US state department said in a note.

Reports earlier this month said Indian state refiners have contracted import of 1.25 million tonnes of crude oil from the Persian Gulf nation and were preparing to replace dollar payments with rupee trade.

The Press Trust of India quoted top industry officials as saying that Indian Oil Corp. Ltd (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) had contracted 1.25 million tonnes of Iranian oil for import in November.

But a Reuters report on Wednesday said India’s Reliance Industries Ltd, owner of the world’s biggest refining complex, has halted imports of Iranian crude ahead of the US sanctions.

Source: Live Mint

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