Deal with new challenges to Indo-Iranian ties

I ran’s threat to rope in Russian oil companies to develop the Farzad-B gas field, replacing the consortium of Indian state-run entities that discovered the gas field can hardly be dismissed lightly. The Iranians are apparently piqued over India’s move to cut purchase of Iranian oil by a fifth over Iranian delay in awarding the gas blocks. They recently hit back by reducing the payment window from 90 days to 60 days for Indian refiners. Simultaneously, the National Iranian Oil Company has cut the discount on ocean freight it offered to Indian buyers from 80 per cent to nearly 60 per cent. Though India may claim a moral right over harnessing the gas fields because they were developed by this country, these are not times in which morality can be a potent basis for a claim. India had stood by Iran through the sanctions over Teheran's nuclear programme and continued to buy its crude after securing a US waiver, citing its rising appetite for oil. That should assuage to some extent the Iranian feelings of hurt which have soured the pitch for India. But ultimately, these considerations work only up to a point.

Considering that the ONGC Videsh Limited had discovered the fields in 2008, it is high time that the two countries move to clinch the deal to develop them. If Iran does indeed go through with its threat to turn to Russia, the part of the oil field which the consortium of Indian state-run entities get will be much smaller. Reports from Vienna quoted Iranian oil minister Bijan Zanganeh as saying that he expected Russian firms to develop a substantial portion of the oil field if the Indian consortium failed to come up with a satisfactory offer. Apart from the gas-field row, Iran is also taking advantage of a narrow price spread between European oil benchmark Brent and Middle East price-setter Dubai crude, which makes it attractive to bring more oil from Europe into Asia.

Evidently, the Iranians are also under pressure from China over India’s development of the Chabahar port in Iran bordering Pakistan. China indeed wants Iran to cooperate in its endeavour to hype up Gwadar port in Pakistan as the prime gateway to the sea which suits its strategic interests. India would require all its skills to wean the Iranians from falling into the Chinese orbit.