India will pay oil bills owed to Iran, avoiding cut off

01 August 2011 | 20:08 Code : 15039 Latest Headlines

BBC--Iran and India have resolved a payment dispute that was threatening to halt the Islamic state's crude exports to India.

The National Iranian Oil Company said the two sides had agreed to settle the bill as soon as possible, state news agencies said.

Iran had threatened to cut off supplies to India if payments were not made by 1 August.

US sanctions on Iran make it difficult to send international bank payments.

"Following bilateral negotiations, the two sides agreed to settle the outstanding bills as soon as possible," Ahmed Qalebani head of the NIOC was quoted as saying by the Iranian Oil Ministry website Shana.

Iran's state-run news agency Irna also reported the deal.

Mr Qalebani indicated that the payments would be made in two parts, with the first being settled in the coming days.

Mohsen Qamsari, head of the NIOC's international department, added that Iran was still shipping oil to India.

About 12% of India's oil demand is met by crude from Iran.

Indian companies have been looking for an alternate way to make payments to Iran after the Reserve Bank of India stopped a clearing mechanism at the end of last year.