India May Route Iran Crude Oil Payments Via Turkey

By RAKESH SHARMA

NEW DELHI—India is looking at using Turkish banks to pay Iran for crude oil, a senior Indian oil-ministry official said Wednesday, as a U.S. official said Turkey’s commercial banks should avoid transactions with Iranian banks the U.S. has identified as conduits for financing of Tehran’s nuclear program.

The oil-ministry official’s remarks came as the U.S. Treasury proposed regulations that would require U.S. financial institutions to divulge information about foreign bank customers that do business with Iran.

Asked about the Indian proposal, David S. Cohen, acting U.S. undersecretary of state for terrorism and financial intelligence, said in Istanbul, where he was meeting with senior government officials and banking executives, that Turkey’s cooperation with sanctions aimed at pressuring Tehran was “critical.”

The question of crude-oil payments to Iran came into focus in December, when India’s central bank stopped payments to Tehran through the Asian Clearing Union, where participants settle payments for intraregional transactions among member central banks, helping economize the use of foreign exchange and transfer costs. India, Pakistan, Bangladesh, Nepal, Iran, Myanmar, Bhutan, the Maldives and Sri Lanka are members. India then made some overdue payments to Iran through Germany’s Bundesbank.

But, according to media reports, Germany stopped accepting money from India for Iranian oil payments following criticism from the U.S. and Israeli governments.

The official said supplies from Iran haven’t been disrupted, but that India needs to find a payment mechanism quickly, as it meets four-fifths of its total crude-oil needs through imports.

“Iran has been ungrudging in supply. They continue to supply as our credibility is very high in the international market,” he said, adding that “we are exploring various options” and that “we are trying through Turkey.”

India imported 21.2 million tons of crude oil from Iran in the year ended March 31, 2010, about 13% of its total crude imports.

Mangalore Refinery & Petrochemicals Ltd., which imports about 7.6 million tons of crude annually from Iran, said earlier this month that it is defaulting on payments for about two shipments every week from Iran.

Another oil ministry official said Wednesday that it could take another two months for the wider payments issue to be resolved.

“There is no threat to supplies, as Iran has assured supplies will continue. They know we are working on a solution, and are serious about it,” the official said.

—Joseph Palazzolo in Washington, D.C., and Marc Champion in Istanbul contributed to this article.

Write to Rakesh Sharma at [email protected]

via India May Route Iran Crude Oil Payments Via Turkey – WSJ.com.