India is aiming to seek another waiver from Washington to continue importing Iranian oil after the first waiver expires in March, while New Delhi is working on a mechanism to allow a branch of an Iranian bank to carry out oil trade using rupees, Indian and Iranian officials said.
As US sanctions on Iran came into force in early November, US surprised the market and granted eight key buyers exemptions from its sanctions, enabling China, India, Japan, South Korea, Turkey, Taiwan, Italy, and Greece to still purchase some amount of Iranian crude. "We will seek another waiver from the United States to deal in Iranian crude," one Indian oil ministry official said.
Indian Prime Minister Narendra Modi's government has given permission to a bank of Iran, Bank Pasargad, to open a branch in Mumbai, officials said. "A branch of the Iranian bank will open in three months' time," said Nitin Gadkari, India's shipping minister, after meeting visiting Iranian Foreign Minister Mohammad Javad Zarif Tuesday. Zafri said Tehran would continue to be a reliable supplier of crude oil to India, which continued to buy Iranian crude even during the previous sanctions.
Indian crude imports from Iran continued in the range of 200,000-250,000 b/d during the previous sanctions on Iran. Nayara Energy, which was then called Essar Oil, took about half of the total Iranian inflows, while the rest was absorbed by state-owned oil companies. After the sanctions were lifted in 2016, Indian state-owned refiners stepped up Iranian crude imports as Tehran offered steep discounts on freight. In addition, Iran allows a 60-day credit on oil purchases, making it lucrative for Indian refiners.
Iranian crude exports to India have been robust before the current sanctions were implemented in November 2018. More than 600,000 b/d of Iranian crude was shipped to India in September, while inflows were nearly 500,000 b/d in October, according to analysts and data from cFlow, an S&P Global Platts trade tracking tool. Analysts expect Indian crude imports from Iran to average about 300,000-350,000 b/d during the waiver period until March.
"We have never allowed any consideration to impede our relations with our partners," Zarif said. "We are working with our traditional partners like India, like China, like Russia so that we continue to work in the interest of our people." He said Iran was also exploring options with the European Union to facilitate trade through Tehran. The Iranian minister said Iran was open to Indian investment in the petrochemical sector around the Chabahar port area.
"We had very good discussions on both Chabahar as well as other areas of cooperation between Iran and India", Jarif said about his meeting with Gadkari.