India may shift to spot markets to meet its oil demand, if the payment problem with Iran was not solved. (photo: Reuters)
Indian Oil Corp has so far been unaffected by an oil payments row with Iran, but could turn to the spot market if there is any disruption to imports, the company's chairman said on Thursday.
A sale of shares in the state-run company planned by the government could start in June or July, B.M. Bansal added during a trip to Singapore as part of a delegation led by the country's oil minister Murli Deora.
"IOC is not buying much of its crude share from Iran. So far we are not affected," Bansal said. IOC buys about 1 million tons from Iran, out of the roughly 40 million tons it imports each year, he added.
India expects the dispute with Iran over payment for crude oil to be settled as early as next week, ending a deadlock that has threatened to stall supplies from the Middle Eastern nation, Oil Secretary S. Sundareshan said on Wednesday.
The two countries are working to sort out the dispute that could block imports of 400,000 barrels per day (bpd) of crude as New Delhi walks a fine line between balancing its energy needs and global diplomatic interests.
The two nations have so far not been able to find a solution on how New Delhi should pay for oil imports from Iran after India's central bank said last month that payments to the Middle East country could no longer be settled using a long-standing clearing house system run by regional central banks.
Bansal also said that his company is losing $28.9 million a day from selling fuels such as diesel, liquefied petroleum gas and kerosene below costs as the government regulates prices to keep inflation in check.
Indian Oil is losing 7 rupees (some $0.16) for every of litre of diesel sold.
The losses, referred to as under recoveries, would total $14 billion in the year ending March, S. Sundareshan said on Wednesday.
These losses are shared by the state-run oil companies and the government. Fuel subsidies cost the government about $3.8 billion a year and are seen as a drain on the treasury.