REUTERS

NEW DELHI INDIA wants to take as much Iranian oil as it can because terms are “favourable”, Oil Minister S
Jaipal Reddy said on Monday, after talks between the two sides last week on payment options for $12 billion of crude a year following fresh US sanctions.

“It will be our endeavour in future to tap the Iran source fully because the terms are fairly favourable,” Reddy told journalists at an energy conference, adding India was exploring all options to pay for the crude.

India, the world’s fourthlargest oil consumer, buys around 12 percent of its oil from the Islamic Republic.

It pays through a Turkish bank after a previous clearing mechanism was shut down in December 2010.

But tougher US sanctions signed into law on December 31 in a further bid to pressure Iran to rein in its nuclear ambitions make the route through Halkbank vulnerable.

An Indian delegation went to Tehran last week to discuss options and the two sides have agreed India could use its restricted rupee currency for some of the payments, a government source said on Friday.

An industry source confirmed on Monday that India was considering rupee payments while ruling out the possibility of paying in yen.

A rupee account for Iran could be used to settle Tehran’s imports from third countries, the industry source said. “It will be an extension of the rupee arrangement wherever possible,” the source said on condition of anonymity.

“Iran was very accommodative,” Reddy said, adding that India respected United Nations sanctions but “we don’t go by sanctions imposed by regional blocks, by certain nations.” On Monday, the European Union banned imports of oil from Iran and imposed a number of other economic sanctions, joining the United States in new measures aimed at deflecting Tehran’s nuclear development programme.

Washington suspects Iran of trying to make nuclear weapons but Tehran rejects the charge and says its programme is for peaceful means.

The United States also wants buyers in Asia, Iran’s biggest oil market, to cut imports to put further pressure on its economy, in what Russian Foreign Minister Sergei Lavrov has called a “strangling effect” to trigger popular discontent.

“We go by our interest,” Reddy said. “Iran is the second- largest supplier (to India) so we need to utilise that source.”