India to pay for Iran oil in Rupee, save $22 billion, cut CAD

[[Bregs]]

HT Correspondent, Hindustan Times new delhi, August 30, 2013

The oil ministry hopes to shave off $22 billion (Rs 1,44,540 crore) from its import bill by paying for Iranian oil in rupees.

“The Prime Minister has told us to save $25 billion (Rs 1,64,250 crore) from the oil import bill. As of today, we have already put together a plan to save $22 billion,” petroleum minister Veerappa Moily said, adding that the savings would amount to more than 1% of India’s GDP.

Further, the ministries of petroleum, finance and external affairs have worked out a joint action plan to cut dollar-denominated oil imports and, instead, explore the possibility of paying other oil exporting nations either in rupees or in their local currencies.

“We are talking to Iraq and are in an advanced stage of talks with Iran on the matter,” a senior official said, identifying two of the countries.

This will provide a huge shot in the arm for India’s economy, which is staring at a potentially crippling oil import bill of more than $200 billion this year following the 20% depreciation in the rupee against the dollar and a possible spike in global crude prices if the US attacks Syria. India imported oil worth $170 billion last year.

The Indian crude basket (the various grades of crude that India imports from different countries) has already jumped 10% to more than $114 (Rs 7,490) per barrel. This could rise further to $120-130 (Rs7,884-8,541) per barrel in if the US does attack Syria. There is speculation that this attack may take place as early as next week.

Without the deal with Iran, such a scenario could debilitate India’s balance of payments situation and result in the already bloated current account deficit going completely out of control. Finance minister P Chidambaram has said he is confident of capping CAD at $70 billion or 4.8% of GDP.

During the last fiscal, India had imported 13.1 million tonnes of oil from Iran, down from 18.11 million tonnes of 2011-12.


Source: India to pay for Iran oil in Rupee, save $22 billion, cut CAD - Hindustan Times

 

[he-man]

ab aayi akal thikaane............

 

[fsayed]

government is working on this type of arrangements with many countries it takes time frustration

 

[janon]

Long overdue move. Hope Iraq agrees as well. It would relieve a lot of pressure on the rupee.

 

[TopCat]

Iran will be insane to accept rupees which is going down 2% every other day... the talk started when the rupee was strong and I dont think Iran will accept 22 billion dollar worth of trash rupees only because India needs it.

 

[[Bregs]]

Iran will be insane to accept rupees which is going down 2% every other day... the talk started when the rupee was strong and I dont think Iran will accept 22 billion dollar worth of trash rupees only because India needs it.

For your kind information what ever oil India is getting from iran-iraq now, the bulk of payment is being made is Rs and it has nothing to do with rupee fall as they will purchase equal amount of other goods from India

Source: http://www.stratpost.com/india-wants-to-use-rupee-crash-to-buy-more-iranian-oil

 

[[Bregs]]

Source: India, Iraq Work to Boost Oil Trade - WSJ.com

NEW DELHI—India and Iraq on Friday signed an energy-cooperation agreement spanning oil exploration and refining as well as work toward establishing a 10-year crude oil supply agreement from the Middle East nation.

Iraq is eager to boost oil supplies to India, one of the largest oil consumers, in the face of shrinking demand from the U.S., which has been getting more of its oil and gas from domestic shale deposits in recent years.

India also wants to increase imports from Iraq, its second-largest oil supplier after Saudi Arabia, as a replacement for dwindling shipments from traditional supplier Iran amid the West's sanctions on Tehran.

Indian Prime Minister Manmohan Singh said the energy-cooperation agreement "will provide a very strong framework to further diversify our cooperation in this sector and we look forward to concrete progress in the near future."

Neither side said how much additional oil India is likely to import under the long-term agreement. India's crude-oil imports from Iraq are currently estimated at about $20 billion annually.

Earlier in the day, Indian Trade Minister Anand Sharma said that the two countries would explore the possibility of a trade-payment mechanism in their local currencies as the nations seek more partnerships in various sectors.

Last year, India introduced a rupee trade-payment mechanism with another major oil exporter, Iran. However, the international sanctions have made it tough for shippers to secure insurance for carrying Iranian oil to India.

The trade talks with Iraq follow a dispute with Iran over its detention of an Indian oil tankercarrying crude oil from Iraq. Iran has denied any political motive and alleged that the Indian tanker was polluting, but the Indian side says the vessel was compliant with laws.

Indian oil companies, which so far have not actively participated in Iraq, now appear more interested in tapping more oil from the country.

Iraqi Prime Minister Nouri al-Maliki said his country will seek partnerships with India in pharmaceuticals, chemical and agricultural sectors.

As part of the discussions, Iraq also offered state-run Indian companies exploration of three oil and gas blocks in Middle Furat Oil Field.

It also allowed three Indian oil companies—ONGC Videsh Ltd, Mangalore Refineries & Petrochemicals Ltd and Reliance Industries—to bid for the Nasiriya oil and gas project.

An analyst said that India needs to strike a balance between Iran and Iraq for its energy needs.

Sanjay Kaul, President at University of Petroleum and Energy Studies, said for India's energy needs, Iran is a "current solution" while Iraq offers a future potential.

India would probably need time to arrive at a rupee payment mechanism with Iraq similar to Iran, which essentially works like a barter trade agreement.

 

[he-man]

Iran will be insane to accept rupees which is going down 2% every other day... the talk started when the rupee was strong and I dont think Iran will accept 22 billion dollar worth of trash rupees only because India needs it.

as if iran itself is in super stable condition........they are desperate to sell oil to anyone and everyone

 

[janon]

Iran will be insane to accept rupees which is going down 2% every other day... the talk started when the rupee was strong and I dont think Iran will accept 22 billion dollar worth of trash rupees only because India needs it.

Of course not. Not only because India needs it, but because Iran needs it as well. That's what any transaction between two entities is about. The rupee may be falling in exchange rate, but it can still buy oil, unlike your currency.

 

[timetravel]

Of course not. Not only because India needs it, but because Iran needs it as well. That's what any transaction between two entities is about. The rupee may be falling in exchange rate, but it can still buy oil, unlike your currency.

also if Rupee comes up now, it will make good investment for Iran !!

 

[he-man]

Of course not. Not only because India needs it, but because Iran needs it as well. That's what any transaction between two entities is about. The rupee may be falling in exchange rate, but it can still buy oil, unlike your currency.

Does these guys know they are from bangladesh??I mean ppl don't even know such a nation exists

also if Rupee comes up now, it will make good investment for Iran !!

Iran can make a few profits.............but at least it will make some

 

[TopCat]

Of course not. Not only because India needs it, but because Iran needs it as well. That's what any transaction between two entities is about. The rupee may be falling in exchange rate, but it can still buy oil, unlike your currency.

WE are not in a double deficit economy rather double surplus economy. And Taka is only for our domestic use and you are not allowed to take that out more than 500 taka.

 

[janon]

WE are not in a double deficit economy rather double surplus economy. And Taka is only for our domestic use and you are not allowed to take that out more than 500 taka.

I know. So think twice before applying epithets like "trash" to the Indian rupee, because the Indian rupee can do a lot more than your own currency can. Buying oil is just one example.

 

[he-man]

Now its proved right that voting against IRAN was a strategic blunder by us.In these times where is saudi,uae,qatar etc??

Only iran came to our rescue and we backstabed them,,,,,this is the worst case of foreign policy in the world!!!

 

[TopCat]

I know. So think twice before applying epithets like "trash" to the Indian rupee, because the Indian rupee can do a lot more than your own currency can. Buying oil is just one example.

Indian rupee can only spin your head. Seems like it is pegged with US dollar today. It can do that much I suppose?? Am I?