India's leading oil companies said on Tuesday that they have arranged for extra oil from nations such as Kuwait, UAE and Saudi Arabia.
The move will help to hedge potential crude oil supply disruptions as Iran had earlier warned that it may halt crude supplies to India on August 1 if outstanding payments do not come through.
Iran is India's second biggest source of oil imports after Saudi Arabia, but over $5 billion (about $22,500 crore) are due to that country for crude oil imports after various Asian, west Asian and European banking channels were successively closed due to international sanctions on Iran over its controversial nuclear programme.
The Indian government, the ministry of finance and the Reserve Bank of India have been trying to negotiate a new payments mechanism without making much headway.
Timing it to coincide with US secretary of state Hillary Clinton's visit to India, Tehran issued its warning on Tuesday - that it will halt supplies of crude to India beginning August unless the issue of billions of dollars in overdue payments is resolved.
"If the Iranian side feels it cannot receive the money for its exported oil punctually and under desirable conditions, it will reconsider its crude exports to India," foreign ministry spokesman Ramin Mehmanparast was quoted across the foreign news wires on Tuesday.
Unperturbed by this announcement the Indian oil firms, however, seemed confident to tackle the crisis brewing out of such threats.
"As we import nearly 400,000 barrels of oil per day from Iran, it will not be easy for Iran to divert such a huge supply of crude oil elsewhere," said a senior official in an oil company.
"India is equally important for Iran as it is for India. So in all probability, the oil supply threat may remain just a threat," he said, while adding that the Indian government and the Reserve Bank of India are working on a suitable mechanism to resolve the payment crisis.
State-owned ONGC's refining subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL) said it is already in talks to increase oil supplies from Saudi Arabia and the UAE to hedge against potential supply disruption from Iran.
MRPL, which is Iran's biggest Indian oil consumer buying about 150,000 barrels per day (bpd), has already started diversifying its crude basket.
For the first time, MRPL has signed a deal with Kuwait to buy 20,000 bpd of oil in this fiscal and has bought extra barrels from Saudi Arabia for July.
"Considering the enhanced level of sanctions against Iran in future, non-resolution of current (payment) crisis, the availability of Iranian crude may be difficult," MRPL acknowledged in a report.
Essar Oil, which also imports close to 100,000 barrels of oil per day, said it was hopeful of an early resolution over a suitable payment mechanism but added that it has also tied up with other oil suppliers from the Middle-East to tackle any supply disruption from Iran.
A senior IOC official also said that alternate sources of oil supplies exist from countries such as UAE and Kuwait.
The United States and European Union have targeted Iran's banking, financial and vital energy sectors with unilateral measures. The annual trade between India and Iran stands at an estimated $12 billion (Rs 54,000 crore), with India purchasing some 400,000 barrels of Iranian crude per day.