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Deal on Iran gas field may be sealed by October

  1. Context: India’s Farzad-B gas project by a consortium of Indian companies led by ONGC Videsh
  2. Farzad-B gas project: A common project by Iran and India to develop the Farzad-B field
  3. It is discovered in 2012 and estimated to have 21.68 trillion cubic feet (tcf) of gas reserves
  4. ONGC Videsh: The overseas arm of state-run Oil and Natural Gas Corporation

India to develop Chahbahar port

  1. Context: A new bilateral agreement between Iran and India was signed during PM’s visit to Iran
  2. Chabahar: To develop and use the port of Chahbahar to access Central Asia and Afghanistan
  3. It is 1st such agreement & will provide India the right to develop and operate two terminals and five berths
  4. This is along with multipurpose cargo handling capacities in the port of Chahbahar for 10 years
  5. Other: In all, 11 agreements were signed by India and Iran, covering culture, finance and conservation
  6. Also the agreement between IPGPL (India Ports Global Private Limited) and Arya Banader of Iran was signed

Immense opportunities after lifting of sanctions, says Modi

  1. Context: Prime Minister Narendra Modi’s visit to Iran (1st Indian PM to visit Iran in 15 years)
  2. PM: Lifting of international sanctions on Iran has opened up immense opportunities
  3. India is looking forward to expanding cooperation with Iran in sectors such as trade, investment, infrastructure and energy
  4. Chabahar port: Will provide wider connectivity
  5. Doubling oil imports: India is looking at doubling oil imports from Iran which, a few years back, was second-biggest oil supplier
  6. Farzad-B gas field: Going beyond the buyer-seller relationship to being genuine partners in the field of energy

A background to Iran oil policy change

  1. In November 2013, Iran had offered free delivery of crude oil to Indian refiners
  2. Why? Tough Western sanctions had crippled its exports
  3. Iran came out of western sanctions in January and has since then made several changes in the way it trades its vast oil
  4. From April 2016, National Iranian Oil Company (NIOC) has informed oil importing companies that the future delivery would be based on Free on Board (FOB) basis and the freight has to be arranged by the buyer
  5. In the last two-and-a-half years, Iran sold Indian refiners crude oil on cost, insurance and freight basis

Iran ends free shipping of oil to India

  1. Iran has ended free shipping of crude oil to India
  2. It has asked refiners like Mangalore Refineries (MRPL) and Essar Oil to arrange for freight
  3. However, the NIOC has agreed to provide vessels and insurance till such time Indian companies are able to arrange the same

Iran is India’s reliable partner, says Rouhani

  1. Context: External Affairs Minister Sushma Swaraj’s visit to Iran
  2. Rouhani: Iran can be a reliable partner for India’s energy needs
  3. Chabahar port: A defining partnership which has the potential of connecting the entire region
  4. India: Has been eyeing deeper energy ties with Iran following lifting of nuclear sanctions
  5. India has already lined up $20 billion as investment in the oil and gas and petrochemical and fertilizer sectors there

India offers to invest $20 billion in Iran

  1. Context: Oil Minister Dharmendra Pradhan is in Iran with a delegation of industry executives for two days
  2. Indian offer: ITo invest $20 billion in Iran’s petrochemical, fertilizer and liquefied natural gas (LNG) facilities
  3. In return: India sought cheap natural gas and land to set up the units

India approves $150 million Iran port plan

  1. News: India approved a $150 million project to develop the strategic Iranian port of Chabahar
  2. Background: In May 2015, New Delhi had signed a MoU with Tehran to develop the port on its southeastern coast
  3. Benefits: It provides opportunities to Indian companies to penetrate and enhance its footprint in the region

What is International North South Transport Corridor (INSTC)?

The INSTC is a project to link India and Iran via the sea route and then through Iran to the Caspian sea onwards to Central Asia.

North_South_Transport_Corridor_NSTC


  1. INSTC is a multi modal transport corridor established in 2000 in St. Petersburg.
  2. The founding members are Iran, Russia and India.
  3. The purpose is promoting transportation cooperation among the Member States.
  4. It connects Indian Ocean and Persian Gulf to the Caspian Sea via Islamic republic of Iran, then is connected to St. Petersburg and North Europe via Russian Federation.
  5. It was expanded to include 11 new members, namely: Azerbaijan, Armenia, Kazakhstan, Kyrgyz, Tajikistan, Turkey, Ukraine, Belarus, Oman, Syria, Bulgaria (Observer).

India-Iran will try to resolve Chabahar Port issue at foreign office consultation

The officials representing India and Iran will attempt to resolve contentious issues related to the proposed Chabahar Port in Iran at foreign office consultation.

  1. The officials attributed the delays to Iran changing terms and conditions for the port, and India seeking a better deal after initially giving in.
  2. The discussions now centre on resolving conditions that both sides consider each other to be imposing.
  3. The consultation will also take up the International North South Transport Corridor (INSTC) project linking India with Central Asia and other countries.
  4. It will also consider regional and international issues such as the rise of the Sunni militant IS and peace talks in Afghanistan.

Iran sanctions end: Cheaper oil, more trade opportunities for India

“We can sign commercial deals with Iran since payment is no longer an issue”.

  1. The lifting of the sanctions on Iran will benefit India with lower oil prices and more opportunities for trade.
  2. Iran will gradually ramp up production by 0.5 million barrels per day over the next six months.
  3. The lifting of sanctions also removes an important hurdle — U.S. pressure to hold off on the deal — in the proposed India-Iran gas pipeline
  4. India reportedly owes Iran $6.5 billion for crude oil purchases, the payment of which has so far been held up due to the sanctions.
  5. One of the major construction projects in Iran that India has taken an interest in is the development of the Chabahar Port.

Government pitches for global north-south corridor

  1. The commerce ministry has pitched for popularisation of International North-South Transport Corridor (INSTC) in a bid to boost trade with former Soviet Union countries, Iran and Russia.
  2. The corridor is an alternative route through Tehran that significantly reduces costs and travel time.
  3. This moves is significant as govt. has adopted a market diversification strategy.
  4. This will help Indian exporters to reduce their dependence on traditional markets in the West.
  5. The ministry also wanted banks and insurance companies to play an active role in boosting traffic through INSTC.

India asks Iran to expedite procedures of Farzad-B gas field

India considers Iran as an important partner and expressed satisfaction at the growing bilateral interaction in diverse area including energy, shipping, ports and railways.

  1. India has emphasised to Iran for early completion of all necessary procedures for its participation in the Farzad-B gas field worth 5 billion US dollars.
  2. India’s request was forwarded by External Affairs Minister to Iranian Minister for Economic Affairs and Finance in Joint Commission Meeting.
  3. Iranian side suggested participation of India’s public and private sectors in development of Chabahar Port and Chabahar Free Trade Zone (FTZ) and in setting up industrial units in it.
  4. India mentioned that Chabahar port will facilitate linking Afghanistan and Central Asia with India which will result in enhanced trade and commerce.

Iran promises preferential treatment to Indian investors

  1. With the lifting up of sanctions, Iran is looking towards India for huge investments.
  2. Major areas where India can invest are – Chabahar port, railways infrastructure, gas & oil projects especially the Farzad B oilfields, fertilizer and petrochemical projects.

India welcomes Iran deal, wary of implications

  1. India and Iran have an annual bilateral trade of about $14 billion with high balance of trade problem due to sanctions in past.
  2. Benefits for India could be cheaper oil imports from Iran and access to Afghanistan through Chabahar port.
  3. Worries are that it could affect India-Israel relations, backlash from Saudi Arabia could lead to closer nuclear cooperation with Pak and Iran’s preferential treatment could go to Russia, China, US and Europe.

How India gains from the Iran N-deal?

  1. The deal could have significant effects on India’s energy needs, as it will allow imports of oil and natural gas from Iran.
  2. Analysts point that oil prices would drop further as a permanent agreement would be reached with Iran, as Iran would then increase its oil production.
  3. A fall in global oil prices would be good news for India. Why?

A $1/barrel fall in international crude oil prices is likely to reduce India’s net import bill by $0.9 billion a year.


 

What else?

  • The Farzad-B gas field project – Discovered by OVL in 2008, might receive a fillip because India could not pursue the project aggressively until now, due to US sanctions against Iran.
  • Gas Pipeline – Between India and Iran.
  • Chabahar Port Route – The peace agreement will lead Indian govt. to push for completion of Chabahar port route to Afghanistan, a gateway to Central Asia.

Indian presence in Chabahar

  1. India to enter into a JV port project in the Chabahar province in Iran with close proximity to the Strait of Hormuz which facilitates ~40% of the global oil trade.
  2. This is India’s answer to the Chinese control over at the Gwadar Port.

Questions (attempt in the comments section)

1

The official start of the lifting of crushing Western sanctions on the Iranian economy is generally said to benefit India. But some commentators argue that it also throws various challenges to India’s relationship with Iran. Examine.

2

Are there possibilities for India to have a broader and deeper relationship with Iran beyond trade relations? Critically analyse.







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