Iran oil is­sue: Govt starts oil diplo­macy with US

In­dia to float sep­a­rate com­pany, later ac­quire in as and when Western sanc­tions are lifted

Business Sphere - - Iran's Nuclear | Deal: What's in it for India? -

As the govern­ment gets ready to float a sep­a­rate com­pany for de­vel­op­ing an oil/gas block in Iran, it has started diplo­matic talks with the US on the is­sue, to avoid Western sanc­tions. The min­istry of petroleum is tightlipped on the is­sue. Of­fi­cials in­di­cate the plan is to float a com­pany and later ac­quire the as­set when the on­go­ing sanc­tions on Iran are lifted. Three In­dian state-sec­tor com­pa­nies had jointly won the block in 2002 from the Na­tional Ira­nian Oil Com­pany. ONGC Videsh and In­dian Oil Cor­po­ra­tion had 40 per cent of stake each; Oil In­dia Ltd had the re­main­ing 20 per cent. The com­pa­nies were de­lay­ing the sign­ing of a pro­duc­tion shar­ing con­tract (PSC) with the Ira­nian au­thor­i­ties due to the Amer­i­can and Euro­pean Union sanc­tions, since do­ing so could in­vite sanc­tions on com­pa­nies. How­ever, Iran is putting pres­sure to de­lay no more and In­dia badly needs crude oil from there, more so as one can pay en­tirely in ru­pees, sav­ing on needed dol­lars. Iran says if it is to sup­ply oil and take pay­ment en­tirely in ru­pees, it wants the PSC signed. Petroleum min­is­ter M Veerappa Moily would like to im­port 11 mil­lion tonnes of Ira­nian crude in this fi­nan­cial year. At $105 a bar­rel, this would be worth $8.5 bil­lion. Moily wanted to re­duce the coun­try’s for­eign ex­change out­flow on crude oil im­port via ru­pee pay­ment to Iran. How­ever, petroleum min­istry sources in­di­cate the hype around this plan has given Iran much more lever­age to de­mand an early PSC sign­ing. “Iran is tak­ing a tough stance fol­low­ing the over-hyped plan. We are tak­ing diplo­matic chan­nels to con­vince the US and Iran si­mul­ta­ne­ously,” said a se­nior of­fi­cial close to the de­vel­op­ment. In­dia does not want to leave the block, since this has proven re­serves of 12.5 tril­lion cu­bic feet of gas. More, Iran wants In­dia to fast-track an ear­lier pro­posal to re­vamp its Chaba­har port. Ac­cord­ing to sources, Iran was re­luc­tant to ac­cept full ru­pee pay­ment. In­dia had hitherto paid for Iran’s oil through Turk­ish Halk Bank and UCO Bank, in 55:45 ra­tio in terms of dol­lar/ru­pee. Use of Ira­nian crude oil in In­dian re­finer­ies came down in 2012-13 from 18.1 mil­lion tonnes the year be­fore to 13.3 mil­lion tonnes, due to the sanc­tions. Un­der a do­mes­tic law of late 2011, the US govern­ment can is­sue sanc­tions against any com­pany that buys Ira­nian crude oil, later ex­tended to any com­pany in­volved in busi­ness with that coun­try, be­cause of which Turk­ish Halk Bank had re­fused to ac­cept crude oil pay­ments for Iran im­ports since Fe­bru­ary.

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