Iran General NewsFrench banks stop credit for Iran fuel imports

French banks stop credit for Iran fuel imports

-

Reuters: Indian refiner Reliance quit selling gasoline and diesel to Iran last year after French banks BNP Paribas and Calyon stopped offering credit on the deals, four company and industry sources said on Thursday. By Nidhi Verma and Luke Pachymuthu

NEW DELHI/SINGAPORE, Jan 10 (Reuters) – Indian refiner Reliance quit selling gasoline and diesel to Iran last year after French banks BNP Paribas and Calyon stopped offering credit on the deals, four company and industry sources said on Thursday.

BNP and Calyon, the investment bank arm of Credit Agricole, likely stopped offering Letters of Credit (LCs) — a standard form of payment guarantee in the oil trade — because of political pressure from Western nations that believe Tehran is trying to develop nuclear weapons, one of the sources said.

The move by the banks is a sign that the U.S.-led campaign to isolate Tehran over its nuclear programme is making it more difficult to do business with the Islamic Republic.

A top Iranian official denied any difficulty for Iran in securing the fuel it needs.

“None of the banks which have something to do with the United States were willing to open (LCs)… because of U.S. pressure,” said a senior Reliance Industries Ltd source who declined to be named due to the sensitivity of the business.

Trade sources said Reliance, India’s biggest private refiner, had been shipping major supplies of gasoline to Iran and occasionally sold diesel, but stopped those shipments in October last year and had not resumed.

In the physical oil markets, the buyer of a cargo or volume of oil is usually required to open an LC from a top bank that the seller will do business with, in order to guarantee payment upon delivery or at the agreed-upon time.

In many cases, particularly those involving deals with Iran, the letters need to be confirmed by European banks, or some Middle Eastern banks, to ensure payment to the seller, said an industry source.

BNP and Calyon are major providers of credit for oil traders globally. Fuel imports are a sensitive subject for Iran, the world’s fourth largest crude oil exporter whose ageing refineries cannot cope with demand.

The banks’ move has not stopped shipments from coming in, but forced Iran to seek supplies from further afield. It has bought some 160,000 tonnes of diesel in the Singapore market over the past week, trading sources have told Reuters.

Iran has had a gasoline rationing scheme since the middle of last year to reduce its dependence on imports, but it has been forced to step up overseas purchases of gas oil this winter as it runs short of natural gas for home heating.

“With refinery maintenance and gas cuts from Turkmenistan, they need to import more diesel,” said a Singapore-based trader.

“NO PROBLEMS ON CREDIT”

Earlier in the day Hojjatollah Ghanimifard, international affairs director at the National Iranian Oil Company, denied any difficulty in securing fuel, telling Reuters: “We have no problems with transactions for exports of crude or imports of products.”

He declined to comment on whether international companies faced problems obtaining LCs, but said: “We could find other means aside from letters of credit, whatever buyers or sellers are happy with.”

Some Asian traders said that some Singapore banks are willing to handle Iranian LCs, but not in dollars. Singapore’s biggest banks are DBS, UOB and OCBC.

U.S. and United Nations sanctions over Tehran’s disputed nuclear programme have targeted Iranian banks, while international banks have come under pressure not to deal with it.

Swiss-based independent trader Vitol, Iran’s biggest supplier of gasoline, decided to end its long-running contract to provide fuel to the country this year after losing money on the deal, an industry source said last month.

An Iranian official was quoted as saying in December that Chinese banks had stopped opening LCs with Iran, although Beijing has resisted moves to penalise Tehran, and recently agreed a major deal to develop its Yadavaran oilfield.

A BNP Paribas spokesman declined to comment on its credit dealings. A spokesman for Calyon did not immediately respond to emails seeking comment, while a Reliance spokesman was not immediately available for comment.

Many bank majors including Switzerland’s UBS AG and Germany’s Deutsche Bank AG have decided to cut some or all of their ties with Iran in the face of political pressure.

Iran’s Central Bank governor said in September that those that left the country, which holds the world’s second-largest reserves of oil and natural gas, would not be welcome back.

Iran, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), pumped about 3.9 million barrels per day of crude oil in December, a Reuters survey showed.

Tehran says its nuclear programme is purely for electricity generation. (Additional reporting by Simon Webb in Dubai; Felicia Loo and Yaw Yan Chong in Singapore; Editing by Jonathan Leff and Ramthan Hussain)

Latest news

Iran’s Poverty “Monitoring System” Has Become Worthless

Ali Rabii, the Minister of Cooperatives, Labour, and Social Welfare of Iran’s previous government, in 2018 informed about the...

Iran’s Severe Political Isolation and Foreign Trade Impasse

Peyman Pak, Head of Iran’s Trade Development Organization, in a TV interview with the state Channel One on October...

Iran: Women Heads of Households Are Victims of the Mullahs

In Iran over the past three years, Iran’s women heads of households have endured exhausting pressures in various social,...

Iran’s Government Normalizes the Coronavirus Outbreak

While the coronavirus death rate in Iran’s fifth wave is still high and many provinces have a critical situation,...

Iran’s Economy Worsens As the Government Continues To Plunder National Wealth

The current economic situation in Iran is the worse one that the country has experienced in the last century....

Political Corruption in Iran, Increasing Number of Secret Parliament Sessions

With the presence of the Iranian regime’s new government, which has become a collection of the most vicious elements...

Must read

US, China acknowledge ‘good progress’ in Iran talks: US

AFP: US Secretary of State Hillary Clinton and a...

UN Says Iran Rejected Inspection of Military Base

Reuters: Iran rejected a request by U.N. nuclear inspectors...

You might also likeRELATED
Recommended to you