KOLKATA (miningweekly.com) – The Indian government will not totally halt crude oil imports from Iran, but will likely show flexibility on volumes of inward shipment as a nuanced stance at the US-India bilateral engagements starting Wednesday.
The Indian government reckons that this willingness to reduce crude volume imports from Iran instead of a complete halt will offer a common negotiating point at the bilateral talks between US Secretary of State, Mike Pompeo, and US Defense Secretary, Jim Mattis, and their counterparts, India’s External Affairs Minister, Sushma Swaraj, and Defense Minister, Nirmala Sitaraman, in New Delhi, starting Wednesday, at the so-called 2+2 Dialogues.
Indian oil imports from Iran in the wake of US sanctions against the Persian Gulf nation were anticipated to be the biggest sticking point on the agenda and Indian officials preparing backgrounders feel that ‘nil imports from Iran’ will definitely not be on the table, as it would jeopardise the country’s energy security, with Iran being the second biggest source of crude for India.
However, negotiations based on India lowering inward volume shipments once US sanctions kick in from November 4, 2018, could be the starting point of the dialogue to firm up the contours of India’s alternative crude oil sourcing post-sanctions, officials here said.
The officials said that reducing crude oil imports from Iran instead of a complete halt would be put on the table while seeking US waivers from secondary sanctions that the US administration has proposed for any country continuing to trade with Iran once sanctions come into force.
Earlier this week, the Indian government allowed national oil refining and marketing majors to import Iranian crude availing shipping and insurance facilities offered by Tehran, as Indian national flag carrier, Shipping Corporation of India (SCI), has stopped plying to Iranian ports in response to US sanctions.
Officials maintained that the Iran crude oil imports could not be permitted to be a stickler to the dialogue agenda which has a larger aim to expand the India-US strategic partnership.
The US was expected to seek a larger Indian role in the former’s Indo-Pacific security architecture and joint development of military platforms, while Washington’s increasing opposition to India sourcing new generation defence equipment from Russia, including the Russian made S40 Triumf air defense missile platform, was likely to feature.
Given the overall strategic importance of taking the India-US partnership to the next stage, with a close eye on China’s dominance in the region, the Indian side would prefer the talks to focus on laying down a timeline for a reduction in Iranian crude oil imports than the US dictating a complete halt, a potential domestic political minefield for the Indian government.
Interlocutors from the Indian side will put across that a progressive reduction of Iranian crude oil imports over a longer period will be matched by higher Indian imports of oil and natural gas from the US, with a commitment that such shipments would increase to $2.5-billion worth in the current year, while they will also reinforce the Indian government’s commitment to reducing the US trade deficit with India.
According to government data, Indian crude oil imports from Iran in April to July 2018 are estimated at 11.24-million tons, up 44% over the corresponding months of previous year.