Iran says dispute will not affect oil exports to India

Reuters, Sunday 2 Jan 2011

The two countries will have to fix a new payment method, after India said it would no longer use a regional clearinghouse system which had been criticized for being opaque

A senior Iranian Oil Ministry official said on Sunday Iran's oil exports to long-time trading partner India had continued despite a dispute over the method of payment, student news agency ISNA reported.

"There has been no disruption in the sale and exports of oil to India in recent days," said Ahmad Qalebani, the head of state National Iranian Oil Company (NIOC).

India buys about 400,000 barrels per day of Iranian crude.

Qalebani said the two countries were determined to carry on cooperating despite problems agreeing a new payment method, after India said last week it would no longer use a regional clearinghouse system which had been criticised for being opaque.

"The economic cooperation between Iran and India in this (oil trade) connection is still continuing," Qalebani said.

The Islamic state, the world's fourth-largest oil producer, is under sanctions over its nuclear work. Washington and its allies fear the programme is a cover to build bombs, while Tehran says it is only aimed at generating power.

Although U.S. sanctions do not cover oil sales, the Asian Clearing Union system used by India and Iran for the trade had been criticised for making it difficult to monitor flows into Iranian organisations against which Washington has sanctions.

On Friday, Deputy Oil Minister Ahmad Khaledi said the dispute with India had been settled by changing the currency for trading. "By changing the currency for oil transactions between Iran and India the problem was solved."

A senior Indian official present at a Friday meeting with Iranian officials said the idea of using euros instead of dollars was discussed but the two sides would need to make sure the European Central Bank would be happy with the transparency.

Qalebani made no reference to any new arrangement between the two countries, which implied the issue remained unresolved.

Short link: