Iran has threatened India that it is willing to halt crude supplies if the country fails to pay overdue payments hampered by international sanctions against Tehran, the Iranian oil ministry said on July 3.
India has been struggling for six months to pay Tehran for the oil supplies through various Asian and European banking channels (Germany in particular), which have been successively closed one after another.
National Iranian Oil Company managing director Ahmad Ghalebani stated: ‘We have seriously warned the Indian side of the possibility to halt oil exports if a solution is not found to clear its arrears.’
Yet, another NIOC director played down the situation, stressing that supplies are yet to be halted and that there were no immediate plans to stop exports to the Indian market. The OPEC nation is working to maintain its trade with India, which is its second largest client after China.
Given that Tehran refuses to be paid in rupees, Indian companies have accumulated a debt of approximately US$ 2 billion since April, according to figures provided by the oil ministry to Iranian media. The possibility of India paying in gold for Iranian crude is one of the solutions under consideration.
Iran is the second largest crude exporter to India after Saudi Arabia, but payments have proved problematic due to international sanctions placed on Iran over its nuclear programme. Despite the Islamic republic's repeated denials over its nuclear ambitions, the United States and the European Union have targeted Iran's banking, financial and vital energy sectors with unilateral measures.
The annual trade between India and Iran stands at an estimated figure of US$ 12 billion annually, with India purchasing some 400 000 bpd of Iranian crude.
However, exports of petrochemicals have proven more straightforward, as the NIPC has announced that Iran has exported US$ 2 billion worth of petrochemical products in two months.
An NIPC director said 2.8 million tons of petrochemical products were exported between March 21 and May 20. The value of the country's petrochemical exports is expected to reach US$ 14 billion by the end of the current Iranian year (March 21, 2012).
Iran produced more than 40 million tons of petrochemical goods in the last Iranian calendar year and the country also exported 18 million tons of petrochemical products worth US$ 11.6 billion last year, evidencing a 26% increase compared to two years ago.
Iran has expanded the range and volume of its petrochemical products significantly over the past few years, as the NIPC has become the second largest producer and exporter of petrochemicals in the Middle East.
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