India, Iran set to settle oil crisis

NEW DELHI, Jan. 12 (UPI) -- A delegation of Indian oil and government officials heads Friday to Iran in an effort to find a new way to pay for oil imports, a government secretary said.

U.S. economic sanctions imposed on Iran last summer banned payment for oil from Iran in U.S. dollars, meaning India could no longer use the traditional Asian Clearing Unit to pay for its oil.

Indian Financial Services Secretary R. Gopalan was quoted by Indian newspaper The Hindu as saying a high-ranking delegation was headed to Iran to meet with oil executives to discuss new ways to purchase crude.

"We have to work out some currency other than the dollar in which payments could be made for the Iranian oil," he said.

New Delhi had considered various alternative mechanisms and currencies for buying crude oil from Iran.

Gopalan said New Delhi was considering using the euro, the yen or the dirham. India, he added, has no other options because Iran is the second-largest supplier of crude oil after Saudi Arabia.

Without a new payment mechanism, India stands to lose 10 million barrels of crude oil from Iran next month. India expects to import about 130 million barrels of crude oil from Iran in 2011, down from 156 million gallons imported last year.