$2.4-bln payoff for Iran in Rosneft-Essar deal

Iran

TEHRAN, August 23, 2017 – Rosneft’s purchase of Essar Oil will see the Russian company clear more than USD 2.4 billion in debt for past oil sales to Iran, international media reported on Tuesday.

The USD 12.9-billion purchase will involve the settling of a total of USD 5 billion in Essar Group’s USD 11-billion debt, according to Essar Capital. A further USD 6 billion in debt will be transferred to Rosneft.

After the lifting of international sanctions on Iran in January 2016, India began taking steps to gradually pay down an accumulated USD 6.4 billion in debt for oil purchases from Tehran.

Progress began in May 2016, when two Indian refineries – Mangalore Refinery and Petrochemicals and Indian Oil Corporation – paid off a combined USD 770 million to the National Iranian Oil Company via Turkey’s Halkbank.

The same bank was to be used to pay off the remaining amount, but progress appeared to stall from mid-2016. A letter from India’s oil ministry to local refiners in May 2016 indicated that the balance would be cleared by the end of August that year. However, no further payments have been reported.

Read our latest insights on: