Energy, Economy

Iran-India Farzad-B Talks Deadlocked Over Gas Price

Ali Kardor Chief Executive of the National Iranian Oil CompanyAli Kardor Chief Executive of the National Iranian Oil Company

Negotiations are underway between Iran and India over a deal to develop a major offshore gas deposit in the Persian Gulf, but the two sides are at odds over the price of Iran's natural gas, chief executive of the National Iranian Oil Company said.

Following last year's lifting of sanctions, India ramped up efforts to secure the development rights for Farzad-B Gas Field as one of the world's fastest-growing economies looks to produce and ship back Iranian gas to meet its energy demand.

Despite taking steps to hammer out differences, the price of gas remains an issue, Ali Kardor said in an interview with ISNA on Tuesday.

"Technical details and the total amount of investments have been clarified, but we have yet to reach an agreement on the gas price," Kardor said.

He added that Iran has made clear its financial expectations from the Farzad-B project and that it is now up to India to meet Iran's terms.

"In our last round of talks, we completely elaborated on our economic stance. The Indians are supposed to evaluate our terms and get back to us," Kardor said.

A consortium of Indian companies, headed by ONGC Videsh Ltd, discovered the Farzad-B field in the Persian Gulf in 2008 but was unable to develop the field after the US and UN-imposed economic sanctions over Tehran's nuclear program.

ONGC recently proposed what it called its "best offer" to develop the Farzad-B project. The proposal calls for investing nearly $6 billion in the Farzad-B deposit and another $5 billion to build a liquefied natural gas export facility in the Persian Gulf coast.

“We are ready to invest provided we get reasonable returns,” the company's managing director Narendra K. Verma said last month. “We will get the project the day we accept their conditions. But for me to go ahead and make such investments, it has to bring reasonable returns and make economic sense."

The gas deal has soured Iran-India's crude oil trade as India's state refiners said they would cut oil imports by a fifth in 2017-18 in retaliation for Tehran's persistence to negotiate a better deal.

According to government and ship-tracking data, India’s crude imports fell by a third to 415,400 bpd in September, making it only the third-largest customer of Iranian crude after China and South Korea.

In response, Iran cut by one-third the time it gave to Indian refiners to pay for oil they buy from it while raising ship freight rates.

Tehran also mounted pressure on India by signing a memorandum of understanding with Russian gas monopoly Gazprom in May on developing a prized gas deposit with more than 500 billion cubic meters of in-place gas reserves.

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