Iranhas received 1 billion euros ($1.4 billion) from India in the last 10 days for long overdue oil debts, indicating the likely end of a sanctions-related problem that had blocked payments all year, an Iranian official said on Monday. Indian refiners expect Iran to resume 400,000 barrels a day of oil exports in September, following an uncertain August, now that they have been able to start paying the debt that Deputy Oil Minister Ahmad Qalebani said amounted to $4.8 billion. India, Asia's third-largesteconomyand Iran's second-largest oil buyer after China, racked up the debt after the Reserve Bank of India scrapped a clearing house system last December -- a move welcomed by Washington as it tries to isolate the Islamic Republic. Sources in India told Reuters that refiners had paid about $1.43 billion through Turkey's state-controlled Halkbank. The refiners hope to settle immediately payable debts in the next few days, the sources said. Qalebani, who is also managing director of the National Iranian Oil Company (NIOC), denied that the Indian payments problem -- one of Iran's biggest headaches to come out of the U.S.-led sanctions drive -- was spreading to other keymarkets. "So far there is no report from Iran's Central Bank of any problems with Korea or China, so our assumption is there is no problem with other countries except India," he said, pointing out the central bank was the body in charge of coordinating payments. Korean government sources told Reuters last week that Iran could face a problem of nearly $5 billion of cash trapped inSouth Koreaby the end of the year as sanctions stop it from repatriating money from oil sales. Tehran has previously denied a Financial Times report last month that sanctions might have prevented China from paying as much as $30 billion for oil from Iran. Washington has tightened sanctions on Iran, which it accuses of seeking nuclear weapons, something Tehran denies. It has pressured other countries to go further than the U.N. sanctions to isolate the Iranian economy and has succeeded in making it increasingly difficult for the Islamic Republic to make international financial transactions. SUPPLY Qalebani denied that Iran had cut its exports to India in August as a way to pressure the refiners into finding a way to settle the debts, saying export levels were normal. However, Indian refiners say Iran has so far not issued them with firm crude supply plans for August, forcing them to look for alternatives. To replace Iranian barrels, some of the Indian refiners bought 3 million barrels of Saudi oil for August. That would be unwelcome news to Tehran, which is keen to maintain its share of Asian markets against its main Middle Eastern rival. NIOC is confirming supply of August cargoes to its biggest Indian client, Mangalore Refinery and Petrochemicals Ltd, on a cargo-by-cargo basis, one of the sources said. Refiners in India said they were confident supplies would return to normal. "They (Iran) had asked us to pay at least a token amount, then they will allocate oil to us," said an executive at one of the Indian refiners. "All of us (Indian firms) have released a good amount of money, so we expect Iran will keep their word and give supply next month," the executive said, on condition of anonymity. MRPL has paid about 1 billion euros, reducing debt that had not been paid on time to $1.2 billion, a source said. Indian companies are first clearing debts whose credit period has expired. Iran had been selling oil to Indian clients mostly with 90-days credit. Essar , Iran's second-biggest Indian customer, and state-run HPCL have each paid $50 million, cutting debts whose credit period has expired to $1.5 billion and $1.2 billion, respectively, the sources said. IOC , the country's biggest oil refiner but Iran's smallest customer, has paid $20 million, reducing its immediately payable debts to $600 million. Heads offinanceat the state-run firms and Essar spokesman Manish Kedia declined to comment on remittances to Iran. The move to clear debt in small batches limits the pressure on the localcurrencyfrom such huge sums. "Why would anybody want to buy big lots in such a volatile market? Isn't it much better to wait till the dust settles down?" said Ashutosh Khajuria, treasurer at Federal Bank. The Indian rupee has weakened in the previous four sessions mainly due to higher dollar purchases by refiners to settle their Iran payments. State-run banks had been buying dollars through the week on behalf of domestic oil refiners to make the payments. At the end of foreign exchange trading in India, the rupee was 44.97 to the dollar. It has depreciated 2 per cent since Aug. 1 as traders see the largely services-driven economy suffering after Standard & Poor's cut the long-term U.S. credit rating by one notch to AA-plus.
