India Looks to Deepen Energy Ties with Iran
During his Tehran visit, Pradhan to discuss plans to buy more oil, settling payment issues
New Delhi: Oil minister Dharmendra Pradhan will visit Tehran on April 9-10, hoping to expand energy cooperation in the first visit by an Indian minister to Iran since Western sanctions were lifted from the Persian Gulf country.
His agenda will include ONGC’s participation in developing the Farzad-B gas field, buying additional crude oil and settling pending payments for earlier oil purchases from Iran. Pradhan will also discuss projects, including petrochemical and fertiliser plants in the special economic zone at Chabahar port, authoritative sources told ET.
Foreign minister Sushma Swaraj will follow Pradhan, likely on April 17-18, to push political ties on the heels of Prime Minister Narendra Modi’s Saudi trip as India strives to balance its ties with Riyadh and Tehran.
Iran’s foreign minister, economic development minister and deputy foreign minister have visited India after Tehran signed a historic nuclear deal with the world powers, creating a huge investment and market opportunity. With Iran emerging as India’s principal gateway to Central Asia, Russia and Europe, the Modi government hopes to give the partnership a push with the high-level visits. Connectivity projects within Iran and linking the region, besides demand for energy, are driving India’s policy towards Iran, sources here pointed out.
“The Farzad-B gas field, purchase of oil from Iran and investment in petrochemicals will be the most important topic of discussions,” Iranian deputy petroleum Minister Amir-Hossein Zamaninia told reporters in Tehran on Monday. A consortium led by India’s Oil & Natural Gas Corporation discovered Farzad-B in 2008 but was unable to proceed due to the sanctions. Last year, ONGC submitted a $3-billion proposal to Tehran for development of the field.
The Farzad-B field in the offshore Farsi block is estimated to hold 12.8 trillion cubic feet of gas. Last month, Pradhan said he was “hopeful” that a deal on Farzad-B could be concluded during his visit to Tehran.
“In Iran, our primary interest is in E&P (exploration and production). We have old engagements with Iran and we continued to buy oil from Iran in difficult times,” he had told reporters earlier. Sources in the Iranian government gave an indication to ET that a deal on Farzad-B may take time. Expressing a similar sentiment, Zamaninia said: “Negotiations about the Farzad-B field are a bit time-consuming.”
The issue of India’s pending payments for oil imported from Iran for three years during the period of sanctions will also figure in Pradhan’s deliberations.
Zamaninia said the Central Bank of Iran is currently negotiating with India and Pradhan will meet bank governor Valiollah Seif to discuss the issue. According to Seif, India wants to pay an outstanding amount of $6 billion in rupees, while Iran is seeking the payment in euros.
According to the Iranian government, the three-year-old mechanism of paying 45% of the oil import bill in rupees and keeping the remaining 55% pending for payment channels to clear has concluded.
Pradhan will also meet Iranian minister of industry, mines and trade Mohammad Reza Nematzadeh and the secretary of the council of Iran’s free trade, industrial and special economic zones Akbar Torkan to discuss setting up complexes in the Chabahar port SEZ. Sources in the Iranian government who did not wish to be identified said India’s presence in Chabahar has rattled a section in the Pakistani establishment.
Foreign minister Sushma Swaraj to follow Pradhan on April 17-18 to push political ties ahead of PM’s Saudi trip