Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
From UPSC’s perspective, the following things are important:
Prelims Level: Location of gas field, nearby gulfs, countries and other map based facts.
Spinoff- Read about Baluchistan, OPEC, Shale gas exploration techniques.
Mains level: India-Iran relations, impact of western sanctions on them in last few years, present status and way forward.
- Farzad-B Gas field is important in various aspects. The distance between Pakistani Gwadar port and Iranian Chahbhar port is just 72 kilometers.
- Geographically both ports are important. Gwadar port enhances the geo-strategic importance of the underdeveloped province Baluchistan. Since 9/11, Indo-Iranian Naval cooperation is seen in the Indian Ocean and Arabian Sea.
- On the other hand, Pakistan and China are collaborating on the development of Gwadar port which is much significant for China to fulfill its economic and strategic needs.
- India has dual objective in Iran, first it wants to encircle Pakistan by maintaining cordial relations with Iran and Afghanistan secondly to counterweight China.
- In fresh conditions, Iran wants India to pay more than triple the gas price for award of the coveted Farzad-B natural gas block to ONGC Videsh (OVL)
- Iran wants India to buy all of the natural gas to be produced from the Persian Gulf block at a price equivalent to the rate Qatar charges for selling liquefied natural gas (LNG) to India under a long-term deal
What is the deal with Qatar?
- Qatar, as per a revised formula agreed upon in December 2015, sells 7.5 million tonnes a year of LNG to Petronet LNG Ltd. — India’s biggest gas importer — at a price of $7-plus per million British thermal unit
Issue with Iran:
- The rate being sought by Iran is triple of $2.3 per mmBtu rate OVL is willing to pay for the gas during [times of] low global oil prices
- If global rates rise, OVL is willing to pay $4.3 per mmBtu, sources privy to the development said
- When oil prices move up, rates of LNG from Qatar would also rise
Why change in Iran’s stance?
- Sources said that since the lifting of western sanctions, Iran is playing hardball over award of the field which was discovered by OVL — the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC)
- Also, Iran allows all the cost sunk in by an operator to be recovered from sale of oil or gas. For this reason, it wants OVL to reduce the cost of development as well as pay a higher gas price.
IRAN Nuclear Deal Explained