India prepares for upset in oil supplies from Iran

New Delhi, Jan 18 (ANI): Oil Minister S Jaipal Reddy on Wednesday said the country needs to be prepared for all eventualities over its oil supplies from Iran.

Reddy's comments come as a delegation from New Delhi visits Tehran to explore alternative routes of payment to ensure supplies without breaching fresh U.S. sanctions.

"Well, I think we continue to be optimistic. Iran continues to be positive. However, we have to be prepared for all eventualities," Reddy told reporters on the sidelines of a function in New Delhi.

The U.S. sanctions, authorised on December 31, penalise any financial institution dealing with Iran's central bank and could make it more difficult for India to pay Iran for oil imports, which fuel around 12 percent of the needs of Asia's third-largest economy.

Despite the sanctions, India has not yet asked its refiners to reduce imports from Iran, though it is looking for alternative supplies.

India meets about three-quarters of its crude demands through imports and Iran is its second-largest supplier after Saudi Arabia.

The United States and its allies in Europe and elsewhere are putting pressure on Iran to curb a nuclear programme they say is aimed at developing nuclear bomb to which Iran has continuously said that its goal is to produce nuclear power.

Reddy also raised concerns over the growing shortage of gas in India, stressing the need to conserve fossil fuel, as it was vital to the country's economic growth.

He added that the final call on the issue would be made by the Empowered Group of Ministers (EgoM).

"There is a shortage of gas in the country. We will receive the suggestion. I am, however, taking the issue to empowered group of ministers and they will take a view," said Reddy who is scheduled to meet independent gas producers to discuss the situation.

Lower-than-expected gas production and the high cost of imported fuel and an inability to pass along the full cost of fuel price increases have thrown the business plans of several firms in India into disarray, including power generator groups such as Reliance Power. (ANI)