* Iran asks Indian refiners to pay euros via Turkey's Halkbank
* NIOC says Halkbank ready to restart oil payments
* India is Iran's second-largest oil buyer, owes $5.3 bln
By Nidhi Verma
NEW DELHI, Nov 13 (Reuters) - Indian refiners have asked the government to clarify if they can pay Iran for crude in euros after the National Iranian Oil Company (NIOC) requested settlement of some debts through a Turkish bank, Indian officials said on Wednesday.
Western sanctions aimed at forcing Iran to curb its nuclear programme have more than halved Iranian oil exports and all but halted the flow of petrodollars into Tehran's coffers. The sanctions have cost Iran billions of dollars a month and crippled its economy.
The United States in February tightened sanctions further by forcing Iran's remaining oil buyers to stop transferring cash payments to Tehran, and instead keep the money in bank accounts in the currency of the importing countries.
Those sanctions cut the payment route Indian buyers had used to pay for over half their imports, which was to transfer euros to Iran via Turkey's state-owned Halkbank.
India is Iran's second-largest buyer, and with no payment route, the cash has quickly piled up. India now owes Iran about $5.3 billion for oil imports, government and refining sources said last week.
In mid-October, NIOC informed Indian refiners that Halkbank was ready to restart channelling the payments to Iran, the sources told Reuters, declining to be named due to the sensitivity of the matter. NIOC said it had been informed that Halkbank could be used again by Iran's central bank.
It was unclear from the communication from NIOC what had changed that would allow the payments to restart without contravening U.S. sanctions, the sources said.
Halkbank declined to comment.
Indian refiners have yet to restart payments via Halkbank and have asked the government for guidance, the sources said.
The relationship between Iran and the U.S. has improved in recent months, leading to speculation sanctions could be eased.
But the U.S. has said it will not loosen sanctions until Iran desists from activities that could facilitate making nuclear arms. Iran says its nuclear programme is to generate electricity, not to build bombs.
Talks between Iran and world powers over the disputed nuclear programme failed to reach an agreement at the weekend to end the decade-long standoff.
Indian refiners Essar Oil, Mangalore Refinery and Petrochemicals Ltd, Hindustan Petroleum and Indian Oil Corp have all bought crude from Iran and owe payment, sources said.
The United States requires Iranian oil customers, most of whom are in Asia, to continuously reduce purchases to qualify for exceptions to sanctions. The waivers are reviewed every six months, and the next review is to take place soon.
The United States in June renewed the waivers for India and eight other countries including Turkey.
India's crude imports from Iran in the first nine months of 2013 fell 40 percent on the year to 194,000 barrels per day.
Desperate to boost sales, Iran is offering free delivery of crude to India and is giving discounts on the price. (Additional reporting by Asli Kandemir in Istanbul; Editing by Manash Goswami, Simon Webb and Tom Hogue)
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