India has started talks on future cooperation with Iran's petrochemical sector, deputy oil minister Abbas Shari Moghaddam said Saturday, Mehr news agency reported.
"Several Indian companies have expressed interest in new petrochemical projects, and are already in negotiations with Iranian authorities," the senior official added.
India is hopeful that its decision to continue cooperation with Iran, and disregard western sanctions aimed at curbing Iran's nuclear energy program, will help it land lucrative oil deals in the country.
“I am a very strong supporter of India’s engagement with Iran. For India’s energy security, Iran is very important because it is endowed with both oil and gas which we require and geographically located nearer to us,” Ranbir Singh Butola, a former chairman and managing director of ONGC Videsh Ltd (OVL), was quoted by Livemint news portal as saying.
An Indian consortium comprising OVL, Indian Oil Corp. Ltd (IOC) and Oil India Ltd (OIL) won a bid for Farsi block in 2002 from the National Iranian Oil Co. (NIOC). Although the group does not have ownership rights, it was to be paid a 15 percent return on investment once it was awarded development rights for Farzad-B gas field in the offshore Farsi block.
Meeting Expectations
“We have been negotiating the kind of remuneration we want for developing the block and terms of engagement. We have not gone out. We have discussed this during sanctions and have been waiting. We are confident that they will honor their commitment for Farsi. Everyone is flocking there,” said Narendra Kumar Verma, managing director of OVL. “The question is have we met Iran’s expectations? The Indian government will have to build upon this relationship,” he added.
OVL, the overseas arm of India’s largest state-owned explorer, is the operator of Farsi block, in which it holds a 40 percent stake. IOC has an equal stake and the balance 20% is held by OIL. The block is estimated to have reserves of up to 21.68 trillion cu. ft (614 billion cubic meters), with recoverable reserves of around 12.8 trillion cubic feet (342 billion cubic meters).
Developing the gas field, together with the construction of a liquefied natural gas terminal to transport the gas, is estimated to require an investment of $8-9 billion. The investment for exploration and production work will amount to around $5.5 billion.
In an attempt to continue its relationship with Iran, OVL didn’t participate in the shale gas and oil exploration projects in the US. OVL withdrew its only hydrocarbon asset in the US in 2003 before investing in Africa’s civil war-ravaged Sudan, fearing a US backlash.
Butola said that once sanctions on Iran are lifted, it will also open the door for other stalled proposals such as the one for buying 5 million tons per annum of liquefied natural gas.
Regaining Market Share
The Iranian Oil Ministry will employ new strategies in negotiations with oil customers to augment its international market share, the National Iranian Oil Company (NIOC) director for international affairs, Seyed Mohsen Ghamsari, said regarding post-sanction plans of the key ministry.
Several oil companies and refineries have expressed readiness to purchase Iranian crude, but an outcome is contingent on the outcome of the nuclear negotiations set for late June, he noted.
Despite the planned marketing strategies, restoring market share "would require effort, as refineries have reworked their technical specifications," said the official. "Reversing the specifications is subject to intense negotiations."
It is unlikely that Iran would be able to regain global market share in the near future, Ghamsari said, adding that the country has a mid-term target.
On oil revenues blocked overseas due to the western and other sanctions, the official said Iran can repatriate the money now held by a UAE company when once sanctions are lifted. "But the oil ministry has no authority over the huge amounts taken by oil brokers, and the issue must be pursued through judicial channels." He did not provide details on the UAE-based company or the issue of brokers.
On Thursday, negotiators at Lausanne in Switzerland reached an agreement that calls for lifting all trade restrictions on Iran. Once the sanctions are lifted, Iran is likely to open up its substantive hydrocarbon reserves to foreign companies that were deterred by the sanctions and US intimidation over the past several years.
