Essar Oil settles $2.5 billion Iran oil dues, still owes about $616 million

New Delhi: Essar Oil has settled about 2 billion euros ($2.5 billion) in dues to Iran to cover previous oil purchases and still owes the country about $616 million, Chief Executive B. Anand said on Thursday.

The outstanding payments stem from delays in paying for Iranian oil when the country was under international sanctions over its nuclear programme. The sanctions ended in 2016.

The new Rosneft-led management, as part of the $12.9 billion acquisition of Essar Oil, took the decision to repay the dues owed to Iran.

Essar Oil aims to buy 120,000 barrels per day (bpd) of oil from Iran in 2018-19, the same as the previous year, Anand said, adding his company was receiving the same concessions as state-owned Indian refiners for Iranian oil purchases.

Iran has deepened discounts on freight to state refiners that have agreed to almost double annual imports from Iran in 2018/19.

The private refiner imports about 60,000 bpd of oil from Venezuela under a term deal and about 50,000 bpd of Mexican oil from spot markets “depending on economics”, Anand told Reuters in an interview during the International Energy Forum.

Essar operates a 400,000 bpd Vadinar refinery in western Gujarat state and sells about 60 per cent of its refined fuels in local markets.

The company recently struck an over $1 billion pre-financing deal with BP and Trafigura with a commitment to repay with cargoes of refined products.

Anand said his firm had no immediate plans to sign more pre-financing deals.

To boost its local sales Essar plans to add 1,500 fuel stations within 18-24 months, he said. Essar currently operates 4,500 fuel stations in India.

“Our retail strategy include adding more value-added services, more automation and digitisation and embracing the changing energy scenario like charging stations,” he said.