Clinton says India needs to do more on Iranian oil imports

KOLKATA Mon May 7, 2012 3:14am EDT

1 of 2. U.S. Secretary of State Hillary Clinton (2nd L) walks down the steps of the Victoria Memorial Hall in Kolkata May 6, 2012.

Credit: Reuters/Shannon Stapleton

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KOLKATA (Reuters) - Secretary of State Hillary Clinton stepped up pressure on ally India on Monday to further reduce its Iranian oil imports, making clear Washington wanted to see further action before granting New Delhi a waiver from U.S. financial sanctions.

Iran is the second-largest supplier of crude to the energy-hungry country. Publicly, India has rejected Western sanctions but privately it has pushed local refiners to start cutting imports of oil from Iran by 15-20 percent.

The issue has become an irritant in ties between the two allies. India is unwilling to be seen to be bowing to U.S. pressure and is reluctant to become too reliant on Saudi Arabia for its oil needs, which officials say privately would be strategically unwise.

Clinton said Washington wanted to tighten the noose of economic sanctions on Iran to force it to the negotiating table over its nuclear program, which the United States and other nations fear is a cover to build an atomic bomb.

"So we think India, as a country that understands the importance of trying to use diplomacy to try to resolve these difficult threats, is certainly working toward lowering their purchase of Iranian oil," Clinton told a townhall-style meeting in the eastern Indian city of Kolkata.

"We commend the steps they have taken thus far. We hope they will do even more," said Clinton, who is due to meet Indian Prime Minister Manmohan Singh in Delhi later on Monday.

She said Saudi Arabia, Iraq and other oil-producing nations were supplying more crude to the markets to offset any loss of supply from Iran.

"If there were not the ability for India to go into the market and meet its needs we would understand that. But we believe there is adequate supply and there are ways for India to continue to meet their energy requirements," she said.

Clinton said the United States would make a decision on whether to exempt India from the U.S. sanctions on Iran in "about two months from now".

The United States in March granted exemptions to Japan and 10 European Union nations from the sanctions after they cut Iranian crude imports.

An Indian official privy to the Indian talks with Iran and the United States had earlier expressed hope that Clinton might announce a waiver during her three-day visit. The official said the government had done enough to secure the exemption.

A senior U.S. official said on Sunday that Carlos Pascual, the U.S. special envoy who has been negotiating with Iranian oil importers to cut their imports, would visit India in mid-May to discuss the issue.

(Writing by Ross Colvin, additional reporting by Matthias Williams in New Delhi; Editing by John Chalmers and Jeremy Laurence)

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