Crude import cuts may get India sanction waiver

Crude import cuts may get India sanction waiver

India may have publicly rejected US sanctions on Iran, but it is understood to be encouraging its state-owned refiners to slash crude oil imports from the West Asian country that could help its financial institutions get waiver from the new sanctions foisted by American President Barack Obama.

New Delhi is unlikely to ask Washington for a waiver from the new US sanctions on Iran. But moves by Hindustan Petrochemical Corporation Limited and Bharat Petroleum Corporation Limited to slash crude oil import from Iran is expected to make it possible for Obama to exempt financial institutions of India from sanctions prescribed under the Section 1245 of the National Defence Authorisation Act (NDAA) for fiscal year 2012.

To lessen dependence on Iran, the BPCL is purportedly planning to raise its crude oil import from Saudi Arabia by about 27 per cent in 2012-13.

The HPCL also proposes to buy 3.5 million tonnes of crude oil from Saudi Arabia in the next fiscal against 1.75 million tonnes purchased in 2011-12.

The moves are likely to help Indian refiners to reduce imports from Iran by about 10-15 per cent next fiscal.

Obama signed Section 1245 of US NDAA into law on December 29 last. The new sanctions primarily target the financial sectors of Iran.

It has provisions for tough actions against foreign financial institutions conducting transactions through or with Bank Markazi Jomhouri Islami Iran – the central bank of the West Asian country – for payment for crude oil imports.

Section 1245 of the American NDAA has provisions for the President to exempt foreign financial institutions from the sanctions, if he feels that it is in the national interest of the US or if he determines that “the country with primary jurisdiction” over the institution
“has significantly reduced its volume of crude oil purchases from Iran”.

India’s crude oil import from Iran declined from 21.8 MT, or 16.43 per cent of total imports, in 2008-09 to 18.5 MT or just about 11 per cent in 2010-11.

“The Government of India cannot ask the US Government for a waiver. It is up to the American President to make a determination (on exempting a particular financial institution) in accordance with the US law,” said a senior official.