India is likely to be one of eight countries which can temporarily import oil from Iran post sanctions, sources indicated Friday, after US Secretary of State Michael R Pompeo said that the US has agreed to exempt eight countries since they have made “significant reductions” in oil imports. US sanctions on Iran will kick in November 5.
“We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation. These negotiations are still ongoing. Two of the jurisdictions will completely end imports as part of their agreements. The other six will import at greatly reduced levels,” Pompeo told reporters in Washington DC, during a conference call with Secretary of Treasury Steven Mnuchin.
Pompeo said that countries like India, if granted exemption, would be asked to bring down oil imports from Iran to zero in six months. Negotiations are still ongoing, he said while explaining the reasons for not revealing the names of the countries to be exempted.
Sources in New Delhi and Washington DC told The Indian Express that India is “likely” to be part of the eight countries which are being granted waiver, but India likely to get Iran oil waiver, US sanctions Monday there has been no official communication so far.
“We are almost certain that India is likely going to be one of those eight countries. But we will wait for the announcement on Monday,” a source said.
Turkey said it has been informed that it is one of the eight countries, while financial news agency Bloomberg reported that Japan and South Korea are the other countries, apart from India.
The US announced its intention to re-impose sanctions on Iran from November 5, as US President Donald Trump tweeted a picture of himself in a Game of Thrones-style poster which said, “sanctions are coming”.
— Donald J. Trump (@realDonaldTrump) November 2, 2018
“President @realDonaldTrump is reimposing all sanctions lifted under the unacceptable Iran deal. The U.S. is reimposing the toughest sanctions ever on Iran, targeting many of the corrupt regime’s critical sectors,” the White House tweeted.
India, which is the second biggest buyer of Iranian oil after China, is being pushed by the US to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes a year (300,000 barrels per day), down from 22.6 million tonnes (452,000 barrels per day) bought in 2017-18 financial year, according to sources.
New Delhi, however, had pushed back on zero oil imports citing the adverse impact on its economy and the inflationary impact it would have.
In September, during the Indo-US 2+2 dialogue, the US told the Indian side that it is not in Washington’s interest to damage the Indian economy. External Affairs minister Sushma Swaraj and Pompeo had discussed the issue of oil imports from Iran.
During the dialogue, the Indian side had “frankly” put across their position on oil imports from Iran. “We told them that we are an energy-reliant country, and candidly told them that rapid reduction of oil imports from Iran will impact our economy. We said that our economy should not be impacted by your policies,” the source said.
According to the source, the US side had replied that they “fully understand”, and added that it is “our policy”, but “it is not in our interest to damage your economy”.
On Thursday, the Ministry of External Affairs’ official spokesperson Raveesh Kumar said: “We have had several rounds of conversation not only with the US but also with Iran and other stakeholders and as far as the US is concerned, they are well aware about our expectations of the requirement which we have for oil domestically and which is very critical for sustaining our economic growth.”
“We have taken note of the US position which was conveyed by Secretary Pompeo that the intention of imposing sanctions on Iran is not to hurt India. We do want to engage and we will continue to engage with the US and other stakeholders to ensure that our energy security is not compromised and also that our national interests are interested,” Kumar told reporters.
India is the world’s third-largest consumer of oil, with 85 per cent of its crude oil and 34 per cent of its natural gas requirements being fulfilled by imports. In 2016, India imported 215 million tonnes of crude oil and at 13 per cent, Iran stood third among India’s biggest oil suppliers, after Saudi Arabia and Iraq at 18 per cent each.
Even during the last set of sanctions between 2012 and 2015, India had continued to import oil from Iran. Although the value of oil imports had dipped from USD 11.6 billion in 2011-2012 to USD 4.3 billion in 2015-16, it had again climbed up to USD 8.9 billion in 2017-18.
For New Delhi, it will have to navigate the issue of oil imports with its strategic interests with the US. The re-imposition of sanctions will not just impact oil imports, but will also impact the development of the Chabahar port. India has consistently conveyed that the port in Iran has a strategic value, and allows it access to Afghanistan and Central Asia.
Earlier this week, Foreign Secretary Vijay Gokhale underlined the importance of Chabahar: “We are also seeking to develop the Chabahar port as a gateway for onward connectivity to and from Afghanistan and Central Asia. Since its inauguration last year, we have shipped about 110 thousand metric tons of much-needed wheat and 2000 metric tons of pulses from India to Afghanistan through this port. To tap its full potential for the benefit of Afghanistan, we might also need to pursue the development of a rail line from Chabahar to Zahedan at some future stage. There is also potential for the development of the International North-South Transport Corridor which will considerably reduce time and cost of transport from India to Central Asia.”