The sanctions against Iran since February 2013 were a bonanza for Indian refiners. (Representational photo)
New Delhi:
The good times have ended for Indian refiners who were getting crude oil from Iran. Petroleum minister Dharmendra Pradhan today told Parliament that Iran has ended free shipping of crude oil to India and Indian refiners have been asked to arrange their own freight.
The sanctions against Iran since February 2013 were a bonanza for Indian refiners. Iran was delivering crude at our doorstep, taking half the payment in Rupees and not raising bills for the rest.
Refiners like Essar oil and Mangalore Refineries Ltd were getting Iranian crude shipped free by Iran's own shipping lines.
But the sanctions were lifted in January. And today, Mr Pradhan told Parliament that the National Iranian Oil Company has asked for all payments to be made in Euros.
This means the Indian refiners will not only have to settle bills from April, but also the dues accumulated since February 2013.
Since the sanctions were imposed, Iran was taking 45% of the payment in rupees. The rest was due till a mode of payment was finalised. This pending amount has now reached $6.5 billion, which will also have to be paid in Euros.
This will hit state-owned Indian Oil Corporation and HPCL. The companies are said to be working out the overall impact of the changes.
The silver lining perhaps is that the National Iranian Oil Company has said yes to continue providing vessels and insurance till the time Indian refiners make suitable arrangements.
Iran came out of western sanctions in January and has since then made several changes in the way it trades its vast oil resources.
"In the international market, contracts for the supply of crude oil are negotiated on Free on Board or Cost Insurance and Freight basis. Hence, the cost of import of crude oil from Iran during 2016-17 will depend on the negotiated terms and conditions between NIOC and Indian oil companies," Mr Pradhan had added.
The sanctions against Iran since February 2013 were a bonanza for Indian refiners. Iran was delivering crude at our doorstep, taking half the payment in Rupees and not raising bills for the rest.
Refiners like Essar oil and Mangalore Refineries Ltd were getting Iranian crude shipped free by Iran's own shipping lines.
But the sanctions were lifted in January. And today, Mr Pradhan told Parliament that the National Iranian Oil Company has asked for all payments to be made in Euros.
This means the Indian refiners will not only have to settle bills from April, but also the dues accumulated since February 2013.
Since the sanctions were imposed, Iran was taking 45% of the payment in rupees. The rest was due till a mode of payment was finalised. This pending amount has now reached $6.5 billion, which will also have to be paid in Euros.
This will hit state-owned Indian Oil Corporation and HPCL. The companies are said to be working out the overall impact of the changes.
The silver lining perhaps is that the National Iranian Oil Company has said yes to continue providing vessels and insurance till the time Indian refiners make suitable arrangements.
Iran came out of western sanctions in January and has since then made several changes in the way it trades its vast oil resources.
"In the international market, contracts for the supply of crude oil are negotiated on Free on Board or Cost Insurance and Freight basis. Hence, the cost of import of crude oil from Iran during 2016-17 will depend on the negotiated terms and conditions between NIOC and Indian oil companies," Mr Pradhan had added.
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