When Iran was under sanctions over its nuclear program, India built up a backlog of payments. India is one of the biggest customers of Iranian crude but just the last month Iran scrapped free delivery of crude oil to Indian refiners. India has finally come up with a plan to pay the $6.5 billion dues before Prime Minister's visit to Iran. Turkey's Halkbank has been identified to facilitate the payment. "The money will be paid in euros," Saurabh Kumar, India's ambassador to Iran said.
An offshore block was discovered by the Oil and Natural gas corporation in 2008 but due to the sanctions from Iran, it was unable to get permission to develop it. Oil Minister Dharmendra Pradhan who travelled to Iran last month to push for development rights to the vast Farzad B gas field in Iran, also discussed India's interest to develop Chabahar port in Tehran.
India does not have many payment options to clear the dues as Iran's banking and financial systems will take time to unify with global processes after the international quarantine of Iran for years. There still exist restrictions on Iran like banks cannot pay Iran in dollars and US banks have been restricted from doing business outright.
Oil ministry official said "While the payment of dues issue is in the throes of being resolved with the help of the External Affairs Ministry, the other matter to be sorted is regarding the shipment of crude oil from Iran." India will have to make its own arrangements now as there are restrictions imposed on trade with Iran and major shipping entities could not be involved.