BY NIDHI VERMA
Iran wants to recover tens of billions of dollars it is owed by India and
other buyers of its oil in euros and is billing new crude sales in euros, too,
looking to reduce its dependence on the U.S. dollar following last month's
sanctions relief.
A source at state-owned National Iranian Oil Co (NIOC) told Reuters that
Iran will charge in euros for its recently signed oil contracts with firms
including French oil and gas major Total, Spanish refiner Cepsa and Litasco,
the trading arm of Russia's Lukoil.
"In our invoices we mention a clause that buyers of our oil will have
to pay in euros, considering the exchange rate versus the dollar around the
time of delivery," the NIOC source said.
Lukoil and Total declined to comment, while Cepsa did not respond to a
request for comment.
Iran has also told its trading partners who owe it billions of dollars that
it wants to be paid in euros rather than U.S. dollars, said the person, who has
direct knowledge of the matter.
Iran was allowed to recover some of the funds frozen under U.S.-led
sanctions in currencies other than dollars, such as the Omani rial and UAE
dhiram.
Switching oil sales to euros makes sense as Europe is now one of Iran's
biggest trading partners.
"Many European companies are rushing to Iran for business
opportunities, so it makes sense to have revenue in euros," said Robin
Mills, chief executive of Dubai-based Qamar Energy.
Iran has pushed for years to have the euro replace the dollar as the
currency for international oil trade. In 2007, Tehran failed to persuade OPEC
members to switch away from the dollar, which its then President Mahmoud
Ahmadinejad called a "worthless piece of paper".
The NIOC source said Iran's central bank instituted a policy while the
country was under sanctions over its disputed nuclear program to carry out
foreign trade in euros.
"Iran shifted to the euro and canceled trade in dollars because of
political reasons," the source said.
BOOST FOR EURO TRADE
Iran has the world's fourth-largest proved reserves of crude oil, and
expects to quickly increase production, which could lead to tens of billions of
euros worth of new oil trade.
Iran's insistence on being paid in euros rather than dollars is also a sign
of an uneasy truce between Tehran and Washington even after last month's
lifting of most sanctions.
U.S. officials estimate about $100 billion (69 billion pound) of Iranian
assets were frozen abroad, around half of which Tehran could access as a result
of sanctions relief.
It is not clear how much of those funds are oil dues that Iran would want
back in euros.
India owes Tehran about $6 billion for oil delivered during the sanctions
years.
Last month, NIOC's director general for international affairs told Reuters
that Iran "would prefer to receive (oil money owed) in some
foreign currency, which for the time being is going to be euro."
Indian government sources confirmed Iran is looking to be paid in euros.
Tehran has asked to be paid using the exchange rates at the time the oil
was delivered, along with interest for those payment delays, Indian and Iranian
sources said.
Indian officials are working on a mechanism that could involve local banks
United Commercial Bank (UCO) and IDBI Bank for handling payments to Iran, one
Indian government source said.
UCO CEO R.K. Takkar said the bank is involved in payments to Iran, but did
not say if there were any plans to change the payment mechanism. IDBI CEO
Kishor Kharat could not be reached for comment.
India could also try to resume payments through Turkey's Halkbank, a
channel it stopped using in 2012, or by direct transfer to Iranian banks
through the global SWIFT transaction network.
With Iran now again linking to international lenders through SWIFT, the
NIOC source said it was easy for Tehran to be paid in any currency it wants,
adding: "And we want euros."
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