Indian Government to Pay in Euro for Iran’s Crude

The Indian government after a meeting with top officials from the finance, external affairs and oil ministries on 3 February 2011 decided to pay in euro for crude bought from Iran. Supplies did not stop coming in despite Indian importers running up an outstanding of $3 billion after RBI blocked a regional money-transfer mechanism. At the meeting it was decided that SBI would route the payment through the Hamburg-based EIH Bank. Importers would put money into SBI account and the bank would then transfer the money to EIH through its Frankfurt branch.  SBI would first clear over $2 billion payment backlog for the four-month period beginning September 2010. Iran's national oil company, NIOC which has an account in EIH was cleared by the German central bank for receiving euro payments for Iranian crude.

 India imported 21 million tonnes of crude from Iran in 2009-10 which amounts to roughly 12% of India’s total requirements. Imports from Iran in 2010-11 are expected to be 18 million tonnes given that Reliance Industries has stopped using crude from the Persian Gulf nation. Iran supplied oil worth $1.3 billion after the RBI scrapped the payment clearing system that included the central banks of Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, Maldives, Myanmar and Sri Lanka.