India says continuing to buy oil from Iran

NEW DELHI - Agence France-Presse

An Omani man rests on a dhow cruising off Oman's Khasab shores along the Strait of Hormuz on January 15, 2011. AFP photo

Energy-hungry India said Tuesday it was continuing to buy oil from Iran, despite an intensifying US campaign to smother Tehran's vital oil exports until it abandons its nuclear programme.

"We have accepted sanctions which were made by the United Nations. Other sanctions do not apply to individual countries," Indian Foreign Secretary Ranjan Mathai told a news conference. "We continue to buy oil from Iran." Iran is India's second-largest oil supplier after Saudi Arabia, providing around 12 percent of the fast-growing country's needs at an annual cost of around $12 billion.

Washington is spearheading a campaign to squeeze Iranian oil exports, and President Barack Obama recently signed a bill allowing penalties on foreign banks who settle oil import costs with Iran's central bank.

The law provides waivers to firms in countries that significantly reduce crude supplies from Iran. Under Washington's measures, foreign firms must choose between doing business with the Islamic republic or the United States.

Mathai said India would not seek a waiver from the United States.

Last week Japan appeared to backtrack on a pledge to cut imports, while China refused to bow to US pressure.

The foreign secretary's remarks came after a high-level government delegation departed for Tehran to work out an alternative mode of payment for oil, a senior finance ministry told AFP, asking not to be named.

Commerce Secretary Rahul Khullar told reporters on Monday the delegation would "work out what (could be done) in terms of the new sanctions under section 1245 of the US Act".

The governments of the two countries would work on financial mechanisms for India to continue to import Iranian crude as well as to promote Indian exports, he added.

New Delhi at present pays Iran $1 billion every month through Turkey.

India fears Turkey may come under pressure to halt the conduit with the fresh US round of sanctions against Iran. The European Union is slated to announce tough measures of its own at the end of the month.

Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council sanctions demanding it desist.

India is Iran's second largest client after China, and absorbs about 20 percent of the Islamic republic's crude exports, buying about 400,000 barrels of Iranian crude per day.

Last year amid sanctions-related payment problems, media reports suggested that India might seek to pay for some of its oil from Iran through barter deals. Iran's imports from India include steel, food and electronic goods.

Iran on Tuesday warned US ally Saudi Arabia to rethink plans to make up for any shortfall in Iranian oil exports, and boosted security for its targeted nuclear workers as it dug in under its showdown with the West.

Tehran has threatened to block the strategic Strait of Hormuz if more sanctions are imposed.