Saudi Arabia has agreed to sell three million barrels of extra crude oil to India to make up for a possible supply cut by Iran over billions of dollars in unpaid bills, a report said Tuesday. Saudi Aramco, the national oil firm of Saudi Arabia, will supply one million barrels each to Indian oil groups Essar Oil, Bharat Petroleum and Hindustan Petroleum in August, the Press Trust of India quoted unnamed officials as saying.
India's Mangalore Refinery, too, is in talks to contract similar volumes, the news agency said. Tehran warned late last month it would halt shipments to India from next month unless the payments dispute was resolved. India is Iran's second largest client after China and absorbs about 20 percent of its crude exports, but Indian firms have been struggling for more than six months to pay Tehran due to international banking sanctions imposed on the Islamic republic over its nuclear programme.
The unpaid bills now total more than $5 billion, according to the Indian government. Annual trade between India and Iran stands at an estimated $12 billion, with India purchasing some 400,000 barrels of Iranian crude per day. India's oil minister S. Jaipal Reddy said late last week alternative supplies were being arranged to meet any shortfall of oil from Tehran from countries such as Saudi Arabia, Kuwait and Iraq as well as from Latin America.
"We are making alternate supply arrangements. There is no need to worry about the oil supply situation," Reddy said. "We have not received any formal letter from Iran (warning of stopping supplies from August). But they are feeling desperate," he added. Iran supplies some 12 percent of India's oil needs.
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