* Iran says impasse ended; India sources say talks continue
* India buys 400,000 bpd of oil from Iran
* White House had applauded India's move on payments
By Nidhi Verma and Ramin Mostafavi
NEW DELHI/TEHRAN, Dec 31 The oil trade
settlement impasse between Iran and India remained unresolved
on Friday, with Iran reportedly saying it had been settled but
several Indian sources saying that talks would continue.
Central bank officials from Iran and India met in Mumbai
on Friday in an effort to keep their $12 billion in oil trade
running, and forcing New Delhi to strike a delicate balance
between its energy needs and its global diplomatic interests.
The Reserve Bank of India (RBI) did not comment other than
to say that it had met with Iranian counterparts at a
technical level to discuss ways to facilitate future
But Iran's deputy oil minister, Ahmad Khaledi, was quoted
as saying by Iran's semi-official Fars news agency: "By
changing the currency for oil transaction between Iran and
India the problem was solved."
Several Indian sources said work towards a solution was
The RBI said last week that oil trade payments to Iran
could no longer be settled using a long-standing clearinghouse
system run by regional central banks, and Tehran has refused
to sell oil outside the old set-up. This week, the RBI
extended the move to apply to all current account transactions.
The White House, which wants governments to stop dealing
with Iran because of its nuclear programme, praised the move,
which came less than two months after President Barack Obama's
trip to India on which he pledged to help boost New Delhi's
"The issue has not been resolved at today's meeting. Views
of all stakeholders will be taken into account, we are hopeful
that it will be resolved shortly," an Indian industry source
India owes Iran 1 billion euros currently and transactions
between the two countries pending until two days ago were
cleared through the existing mechanism, a source familiar with
the matter said.
Indian officials and traders had been hopeful of a quick
resolution to the payments row that could have disrupted about
13 percent of its oil imports and leave refiners scrambling
for expensive alternative sources of crude.
Importers of Iranian crude include state-run Hindustan
Petroleum Corp Ltd , Indian Oil Corp and
Mangalore Refinery and Petrochemicals Ltd and
privately-run Essar Oil .
U.N. sanctions on Iran do not cover oil sales.
In a solution under discussion, banks and oil companies
would put in place an alternative means of settlement for
India's oil purchases from Iran, a person familiar with the
South Korea pays for Iranian crude using the won.
"In order to not allow Americans and Europeans to create
any problem, we said let's do our business in other currencies
like (Emirate) dirham or yen," Iran's Khaledi was quoted as
An economy growing at about 9 percent a year has made
India the world's fourth-largest importer of crude. Iran is
its second largest supplier after Saudi Arabia.
Indian oil importers get 90 days credit for payment so
they are covered for old transactions, but future shipments
would be in jeopardy if the matter had not been resolved.
India buys about 400,000 barrels per day of Iranian crude,
settling payments through the Asian Clearing Union, a system
created in the 1970s by central banks in South Asia and Iran
to clear trade payments between them.
Critics say the scheme is opaque to the monitoring of
flows into Iranian organisations against which the United
States has sanctions, as settlements are made on a net basis
every two months.
Suspending Iranian imports when global crude prices are at
near two-year highs and when Indian inflation is uncomfortably
high would be costly for India.
India and Iran have long-standing ties but analysts say
irritants and a new strategic thinking are prompting New Delhi
to adopt a more nuanced and assertive policy.
New Delhi's interests are increasingly tied with the
United States, and it is also mindful of Arab concerns over
Iran's nuclear ambitions.
"When it comes to Iran, India can ignore pressure from the
U.S. and noises from Israel, but it cannot ignore concerns
from the Arab countries," said P.R. Kumaraswamy, head of West
Asian studies at New Delhi's Jawaharlal Nehru University.
"In a very subtle way, India is sending a message that its
closeness with Iran will not affect relations with other
Middle Eastern countries."
(Additional reporting by Prashant Mehra and Swati Pandey in
Mumbai; Writing by C.J. Kuncheria; Editing by Tony Munroe and