IRAN-LD-CRUDE 2LST

Sources said SBI feels routing money to Iran through EIH
would put it in vulnerable position.
The lender has branches in New York, Chicago, Los Angeles
and Washington, which could all be affected by the possible US
sanctions.
American banks holding corresponding banking
relationships with the State Bank of India could also
potentially be affected.
India imported 21.3 million tonnes of crude oil from Iran
in 2009-10 and imports in 2010-11 are expected to amount to
around 18 million tonnes, as Reliance Industries has totally
stopped using crude oil from the Persian Gulf nation.
MRPL is the biggest importer of Iranian crude oil in the
country, sourcing about 4 million barrels every month, which
amounts to 7.1 million tonnes every year.
Mumbai-based Essar Oil imports roughly 3 million barrels
every month (about 5 million tonnes a year) and IOC and
Hindustan Petroleum Corp (HPCL) about 3 million tonnes each.
RBI last month instructed Indian lenders to stop
processing current-account transactions with Iran using the
ACU. It said Indian firms can't use the ACU mechanism when
making payments for oil or gas imports.
The ACU, which comprises Iran and eight South Asian
nations including India, is an arrangement where transactions
are settled by the central banks of these countries. That
makes it difficult to identify individual firms doing
business.
In January 2009, Iran advised local and Indian companies
to use the ACU as a way to avoid international sanctions
and the US banking system.
ACU, based in the Iranian capital of Tehran, settles
trade transactions between Bangladesh, Bhutan, India, Iran,
Nepal, Pakistan, Maldives, Myanmar and Sri Lanka.
Till 2008, payments to Iran under the ACU mechanism were
done in US dollars, but after United States imposed sanctions
against the Middle East country over its suspected nuclear
weapons programme, the currency was switched to the euro.
United Nations sanctions do not forbid buying Iranian oil
and recently the European Central Bank (ECB) asked the RBI to
provide certificates that the euro is being used to import
products that are not on the US sanctions list.
ACU is a clearinghouse arrangement among nine central
banks, including that of Iran and South Asian nations, that
settles trade-related payments between members every two
months.
This cycle led to pressure from the US, which says the
system is opaque and Tehran could be using it to finance its
alleged nuclear-weapons program. PTI