India engages with US to ensure energy security amid Iran sanctions

India engages with US to ensure energy security amid Iran sanctions

Japanese imports of Iranian oil in October will come at a time when the government is still pressing the United States to allow Japan to continue importing Iranian oil, while leaving refiners to make their own decisions over their imports as U.S. sanctions loom on the horizon.

In the Bush administration and during the Obama administration until the 2015 nuclear deal with Iran, some USA allies, including Japan, South Korea and India, were given waivers from sanctions related to Iranian oil imports.

South Korea, Japan, and India are all negotiating waivers, but until they receive clarity on the issue, South Korea and Japan are not risking sanctions in case they won't get exemptions. India's imports from Iran are expected at 360,000 bpd-370,000 bpd for September/October compared to 658,000 bpd for April-August, according to data from trade sources obtained by Reuters.

Under the process, India used to pay in euros to clear 55% of its dues through Halk bank based in Ankara.

The CRS said some projects that India has pursued in Iran involve not only economic issues but national strategy.

The port facilitates access to Afghanistan by bypassing Pakistan and is also a vital link in the International North-South Transport Corridor.

Noting that India had hesitated to move forward on that project because of USA opposition to projects that benefit Iran, the CRS said.

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India has also been hoping that the USA will give it some relief from the sanctions.

UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the USA financial system. During Iran President Hassan Rouhani's visit to India in February 2018, he and India's Prime Minister Narendra Modi signed memoranda outlining future expanded energy cooperation, the report added.

They said the European Union has been telling India that it was in the process of coming out with a payment mechanism as using U.S. dollars for oil transaction will be restricted post-November 4 when the United States sanctions come into force.

Chennai Petroleum, a subsidiary of the country's biggest refiner Indian Oil Corp (IOC), has a deal to buy up to 2 million tons, or 40,000 bpd, of oil from Iran in the fiscal year 2018/19.

However, despite its actions, Washington will not succeed in stopping Iranian oil exports, experts say, nevertheless, the decline will be felt as the Iran's economic crisis worsens.

In September, the trend of reduced Iranian oil exports has continued, and analysts expect further cuts from some of Iran's oil customers.

The company is ending the relationship in order to keep its insurance coverage once new sanctions against Iran by the United States take effect. SBI has told refiners it would stop handling Iran payments from November.

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