India, NPC Discuss Cooperation

India, NPC Discuss Cooperation India, NPC Discuss Cooperation

India is keen to invest in petrochemical projects off the Gulf of Oman, due to advantages of the region such as lower transport costs, among other things, deputy managing director of the National Petrochemical Company (NPC) said after a meeting between senior Iranian energy officials and an Indian trade delegation, headed by New Delhi's ambassador to Tehran, Dinkar Prakash Srivastava.  

Investment opportunities in several petrochemical projects in Asaluyeh and Chabahar Port in south Iran were high on the agenda, Mohammad Hassan Peyvandi was quoted by IRNA as saying.

Chabahar Port is expected to become Iran's third biggest petrochemical hub after Asaluyeh and Mahshahr. Construction of the port is estimated to cost $10-12 billion and will be completed over 10 years.

"A long-term gas feedstock price for petrochemical complexes is the main hurdle to foreign investments in petrochemical projects," Peyvandi said, adding that a long-term formula for feedstock prices has yet to be devised.

"Gas prices are beyond the scope of current negotiations and the issue must be addressed at a ministerial meeting," he noted.

  Blocked Revenues

Official from the Central Bank of Iran (CBI) and India are holding negotiations behind closed doors to resolve issues on Iran's oil revenues blocked in India, director of international affairs at the National Iranian Oil Company (NIOC) was quoted by Mehr news agency as saying.

So far, around $4-5 billion dollars of NIOC revenues are frozen in India, Seyyed Mohsen Ghamsari said, adding that their repatriation is contingent on removal of financial sanctions against the CBI and other Iranian banks.

However, India's trade minister said in March that the figure stands at $8.8 billion.  Iranian commercial banks' deposits with India's UCO Bank were 178.9 billion rupees ($2.86 billion) as of March 16 while Indian refiners owed Tehran $5.9 billion as of Feb. 28, Nirmala Sitharaman was quoted by Reuters as saying.

Indian refiners settle 45 percent of Iranian oil payments by depositing rupees in Tehran's commercial banks' account with UCO Bank, and withhold the remaining 55 percent. Iran taps funds in the rupee account to import goods from India.

CBI is in charge of oil revenues, formulating procedures through which Iran can repatriate the money owed by Indian refineries to the NIOC for the crude they import from Iran, while the NIOC remains at the helm of export and marketing operations.

Officials from India's finance and oil ministries and executives from ONGC Videsh and Mangalore Refinery and Petrochemicals Ltd are part of a delegation that will hold meeting with their Iranian counterparts this week, according to Reuters.

Apart from seeking more oil at better terms and other investment opportunities in the energy sector, India will push for development rights at the Farzad-B gas field in Farsi block, the report said. India, Iran's top client after China, has been reducing its imports from Iran under pressure from western sanctions.

India, Iran's top client after China, has been reducing its imports from Iran under pressure from Western sanctions.

  Condensate Contract With China

The NIOC has signed a new contract with China to increase gas condensate exports to the Asian country, Ghamsari noted.

Iran will supply 50 percent more condensate to Chinese state trader Zhuhai Zhenrong Corp. under a renewed one-year supply contract for gas condensate. According to the new contract, China will import an additional 100,000 barrels of gas condensate per day from Iran from August.

The new contract will increase total gas condensate exports by 30,000 bpd compared with the same period last year.

The condensate, a byproduct from Iran's South Pars gas project, would go to independent petrochemicals producer Dragon Aromatics. Dragon's condensate splitter, in the Chinese city of Zhangzhou, processes the Iranian oil into liquefied petroleum gas and naphtha, which feeds a paraxylene complex.

China is Iran's largest oil client and the renewed contract could lift its overall crude imports from the Islamic Republic to above 600,000 bpd later this year, higher than the average pre-sanction rate of about 555,000 bpd.

  Boosting Oil Exports

A new round of negotiations has initiated between the NIOC and several Asian refineries to resume oil exports once sanctions are lifted, Ghamsari said, reiterating Iran's ability to restore oil export volume to its pre-sanctions level.

"Special measures are being taken to increase oil exports," the official said, without further elaboration. A surge in the volume of petroleum exports hinges on lifting of sanctions against the energy sector.

The US and its allies imposed tough sanctions on Iran to curb the country's nuclear program which they claim is geared to military use. Iran insists its program is peaceful.

The EU also has imposed sanctions on oil purchases from Iran. Overall, sanctions have sharply cut back oil exports and isolated Iran from international banking systems.

A ban on the import of crude oil and petroleum products from Iran means a substantial loss for Tehran's main source of foreign revenues. Iran's oil exports have been cut by more than half to around 1.1 million barrels per day from a pre-sanctions level of 2.5 million bpd.