India is ready to pay $1.5 billion to Iran to clear part of a backlog of payments for shipments of oil following the partial easing of western sanctions on Tehran, a senior Indian government official said.

In a Nov. 24 deal with six major powers, Iran won access to $4.2 billion in oil revenue from a number of countries that has been frozen abroad. The funds will be paid in eight transfers on a schedule that started with a $550 million payment by Japan on Feb. 1.

South Korea is set to make two payments in March totalling $1 billion, banking sources said on Wednesday, and the next scheduled tranche of oil funds would come on April 10.

"We are ready to make a payment as soon as banking modalities are worked out," Oil Secretary Vivek Rae told Reuters.

He confirmed a Reuters' report that Iran had sought $1.5 billion from India in back oil payments.

The federal finance ministry is working out the banking channel that will be used for the payments, he said.

Tehran is allowed to receive $450 million from India on March 1 if it satisfies targets set down in the November deal, according to the payment schedule. It can then receive two further tranches of $550 million on March 7 and April 10 without having to meet further conditions.

Payments from April 15 will be contingent on confirmation that Iran has kept its commitment to dilute all of its 20 percent enriched uranium to no more than 5 percent enriched uranium.

Last month India sharply raised imports from Iran, but total shipments from April through January, the first 10 months of this fiscal year, averaged about 201,000 barrels per month, reflecting a decline of 26 percent from a year ago.

Since February last year, Indian refiners have been withholding 55 percent of the money owed Iran after a previous payment mechanism through Turkey's Halkbank was stopped under pressure from sanctions.

The refiners now owe roughly $3 billion for Iranian crude, and the $1.5 billion in scheduled payments will clear around half of that.

Meanwhile, they have been depositing the other 45 percent in rupees in UCO Bank, which Tehran has been using for importing goods from New Delhi. – Reuters