New Delhi: Indian refiners completed payment of $900 million in frozen oil revenues to Iran on Wednesday under an interim deal that eased some sanctions against Tehran over its disputed nuclear work, said industry sources with direct knowledge of the matter.
Iran and the United States, China, France, Germany, Britain and Russia agreed in July to extend the initial six-month interim accord to November 24 after they failed to agree a final resolution to their dispute before the deadline.
Tehran would have to curb its nuclear work to ensure it cannot be applied to weapons in exchange for removal of the sanctions that have hobbled its oil-based economy by cutting off the flow of payments for its crude exports.
"The first instalment of $400 million was cleared last month and today the companies paid the second instalment of $500 million," said one of the industry sources.
The sources declined to be named because they are not authorised to speak to the press.
In the second instalment of $500 million, Mangalore Refinery and Petrochemicals Ltd and Essar Oil paid around $220 million each, Indian Oil Corp about $60 million and Hindustan Petroleum Corp about $5 million, according to the sources.
Indian refiners settle 45 per cent of their oil payment to Iran in rupees through a local bank, while they continue to hold on to the remainder that are remitted to Tehran under the interim deal. Iran uses the fund in rupee accounts to pay for imports from India.
The payments are made using an existing mechanism based on a series of back-to-back transactions in different currencies that are initially channeled through the Reserve Bank of India (RBI). Iran will eventually get the payment in dirhams from the United Arab Emirates' central bank.
Tough sanctions put in place in 2012 have reduced Iran's exports by more than half from around 2.5 million barrels per day (bpd).
Iran's biggest oil clients - China, India, Japan and South Korea - imported 6.6 per cent less in September than a year ago, the first on-year decline since December, but shipments rose back above the 1 million bpd mark allowed under the interim deal that eased Western sanctions.
US Secretary of State John Kerry will meet Iran's foreign minister and the European Union foreign policy chief in Oman on November 9-10 to discuss the Iranian nuclear issue ahead of the November 24 deadline for a final agreement.
Copyright @ Thomson Reuters 2014
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