India’s central bank said last month that payments to Iran could no longer be settled using a long-standing clearinghouse system run by regional central banks.

Iran has agreed to sell oil to India on credit in January amid reports that an Indian delegation, comprising officials from the Indian Finance Ministry, the country’s central bank and State Bank of India, was expected in Tehran on Friday to find a solution to the issue.

According to Indian Petroleum Secretary S. Sundareshan, the issue is expected to be resolved by Jan. 18. “Resolution of the deadlock on crude oil payments in a non-US dollar currency is only a matter of time,” he said.

Iran, meanwhile, continues to ship crude to Indian refineries based on the guarantees given by the oil companies, Sundareshan added.

He ruled out any possibility of a disruption in crude supplies from Iran, stressing on the good working relationship between Iran and India.

Earlier, a senior Indian official said the New Delhi government will not allow Washington to meddle with its energy ties with Iran.

“The Indian people need fuel and the New Delhi officials will not permit the White House to decide for the Indian people’s fate,” Indian Deputy Oil Minister Bahara Gava said.

He also underlined his country’s enthusiasm for signing and implementing oil and gas contracts with Iran. “India imports 400,000 barrels of crude oil from Iran and the amount will go twice up to 2015,” he said. “Thus, the Indian government continues to insist on continued trend of trade deals with Iran.”

Iran is India’s second-largest supplier of crude oil after Saudi Arabia. India imports $12 billion of crude annually from Iran — about 14 per cent of its total crude import bill.

Separately, there were reports on Thursday that India’s Oil and Natural Gas Corp (ONGC) may get delayed in finalizing a deal to take a 40 percent stake in Iran’s South Pars Phase 12 gas project owing to difficulties in securing funding.

Banks are not keen to fund the gas project as the Middle East country faces US and UN economic sanctions. “We signed the MoU in December 2009. Thereafter, we have been in dialogue. We have to take care any initiative from us has to be in conformity with government policy,” RS Sharma, chairman of ONGC said.

In another development, Sundareshan said India may allow state-run refiners to use crude oil from the government’s strategic petroleum reserves to avoid buying crude at time of spikes in global prices.

It would be a shift from the Indian government’s earlier position that the strategic reserves would only be used by the state to cover up any scarcity in oil supply.

The government’s emergency crude oil reserve facilities, the first of which will only be completed by January 2012, will account for about 3 percent of India’s annual crude import, which stood at 159.26 million tons in the year through March 2010.

“It’s quite possible that we will let the refiners use the facilities,” he was quoted as saying by Dow Jones Newswires. “They [refiners] may also help us in filling the reserves.”

State-run Indian Strategic Petroleum Reserves is building 5.33 million metric tons of strategic crude oil storages at three locations in south India —1.3 million tons at Visakhapatnam, 1.5 million tons in Mangalore and 2.5 million tons at Padur.