Essar Group of India to Provide Steel Sheets in Exchange for Iranian Oil Payments

Reuters reported in an exclusive story about a $2.5 billion deal between the National Iranian Oil Company and India's Essar Group, under which the industrial group will export steel sheets to Iran in exchange for oil payments. On Friday, December 7, Reuters reported that it had obtained a copy of a letter from Ghadir Mohammadzadeh, the financial director of the National Iranian Oil Company, dated August 26, proposing that both parties utilize this payment system. In his letter, Mohammadzadeh stated that Essar's oil subsidiary could use this system to pay approximately $1 billion of its debts to Iran. The letter requested that Essar obtain permission for this from the Indian government and the central bank. According to Reuters, Essar has also asked the Indian government to exempt them from making payments to Iran and allow them to instead export steel sheets to one of the subsidiaries of the National Iranian Oil Company. The National Iranian Oil Company and the Indian Ministry of Finance have refrained from commenting on this deal. However, according to Reuters, participants in a meeting held on November 3 at the Indian Ministry of Oil, attended by finance and trade ministers and representatives of refineries, have generally agreed to this deal, pending final approval from the government. Meanwhile, according to Reuters, Essar Steel agreed in January to supply the steel sheets needed by the Engineering and Development Company of the National Iranian Oil Company. Steel exports to Iran began in May, and Essar has so far sent approximately $100 million worth of steel sheets to Iran. It is still unclear whether such transactions with India are subject to international sanctions and unilateral U.S. and EU sanctions against the Islamic Republic. Essar Group emphasized in an email to Reuters that purchasing oil from Iran by its oil subsidiary and selling steel sheets to Iran by another subsidiary is not a barter deal, and all exports and imports of this industrial group are conducted according to the policies of the Indian government. Reuters described such transactions as a new method of circumventing sanctions against Iran, noting that the prohibition on steel exports to Iran was mentioned in the 2012 U.S. sanctions. The U.S. Treasury Department has declined to comment on this multi-billion dollar deal, and Iranian officials have not yet responded to this report.