India to Expedite Iran Crude Payments

India to Expedite  Iran Crude PaymentsIndia to Expedite  Iran Crude Payments

An Indian delegation that visited Tehran last week, following the latter’s landmark nuclear deal with six other global players, has discussed ways to expedite crude oil payments of $6.5 billion to the Persian Gulf nation.

The delegation also held talks with the Iranian authorities on the issue of ONGC Videsh getting access to develop the prolific Farzad-B field. The delegation comprised Rajiv Mehrishi, secretary in the department of economic affairs, and Ashutosh Jindal, joint-secretary in India's Petroleum Ministry, and officials from ONGC Videsh, Financial Express reported.

Getting access to the Farzad-B assets is vital for OVL to achieve the milestone of producing 20 million tons of oil and equivalent by 2018. The Farzad-B field, estimated to have 21.68 trillion cubic feet of gas reserves, was discovered by OVL in 2012, but no formal contract to exploit the resources has been signed till date.

The US sanctions on Iran discouraged India from making any headway in commercial exploitation of the reserves, with Iran retaking the project over the delay.

Sources said the talks with Iran were “amicable”. They added that after the talks with Iranian officials, Mehrishi will discuss with the Reserve Bank of India a feasible route for crude oil payments to Iran. The pending payments for crude oil could happen in tranches.

Earlier, state-owned UCO Bank had tied up with Iranian lenders—Parsian, Pasargad, Saman and EN Banks—for the settlements of dues. “Nothing concrete has happened as of now. We should be able to come up with some clarity in the next 10 days,” an official who visited Iran said.

Indian refiners MRPL, Essar Oil and IOC have been buying crude oil from Iran. However, the payments could not be routed due to sanctions levied by the US and other western powers.

India, the world’s fourth largest oil consumer and also the second biggest buyer of Iranian oil after China, drastically cut down its imports from Tehran pursuant to imposition of sanctions against Iran.

In 2014-15, India bought nearly 10-11 million tons of crude oil from Iran. In 2009-10, crude oil imports from Iran were to the tune of 21.2 million tons, which declined to 18.5 mt in 2010-11; 18.1 mt in 2011-12 and further to 13.1 mt in 2012-13.

New Delhi settled some bills for crude oil purchases with Tehran in lieu of other exports from India such as rice. India’s rice exports to Iran constitute around 25% of the total value as well as volume of annual aromatic rice shipment. Meanwhile, making strong efforts to secure contracts to monetize the prolific Farzad-B gas field, ONGC Videsh Managing Director N K Verma is understood to have held dialogues with the National Iranian Oil Company.

Another official, privy to the developments, added that the first round of talks was positive but it will take some time to make any formal announcement, as issues are under progress.

India is also willing to offer Iran an integrated package for developing the Farzad-B field, which includes swapping gas from the field with other Iranian gas at Chabahar Port and also laying a pipeline for the transportation of the surplus gas to India.