India's Minister of Petroleum and Natural Gas Dharmendra Pradhan met senior Iranian officials in Tehran on Saturday on the first day of a crunch visit aimed at bolstering bilateral economic and energy ties.
The two sides discussed settling India's multibillion dollar oil debt to Iran and boosting crude exports, and signed a memorandum of understanding to expand cooperation in petrochemical and exploration and production projects.
"The visit will surely help expand economic ties, especially in the energy sector," Zanganeh said after meeting his Indian counterpart who is on his first visit to Tehran after the sanctions against it were lifted in January, Shana reported.
"Iran is not only interested in expanding commercial ties with India, but is willing to attract the investment of Indian firms in the oil and gas sector," he added.
A delegation of private Indian companies, including Essar Group, Reliance Industries, engineering and construction firm Larsen & Toubro, drilling contractor John Energy, chemicals producer Deepak Nitrite and coalbed methane producer GEECL, has accompanied Pradhan in his three-day visit to the Iranian capital.
The delegation is formed by the Federation of Indian Chambers of Commerce (FICCI) and supervised by the federation's former president, Y.K. Modi.
Zanganeh said Iran is currently exporting 350,000 barrels per day of oil to India, but hoped the lifting of sanctions will lead to more oil purchases from the South Asian country.
A report by Reuters citing preliminary tanker data this week surmised that India took in more than 500,000 barrels of oil per day from Iran in March, the highest in at least five years. Shipments are expected to grow over the next few months in line with Iran's pledge to ramp up crude production and export to its pre-sanctions levels.
According to reports, Iran was India's second-largest oil supplier by 2009, but exports dramatically fell after the US and the EU slammed tougher sanctions against Tehran in 2012 targeting its nuclear program.
The Islamic Republic is increasing its market share in the European market, but it equally needs to maintain a strong foothold in more traditional markets such as India, Japan, China, South Korea and Turkey to regain the market share it lost to rival producers.
--- Petrochemical Trade
Zanganeh said Iran is ready to provide Indian companies that invest in petrochemical projects with an abundant supply of natural gas.
He added that Indian companies have been notified of the price of feedstock for petrochemical projects. Feedstock tariff is an essential factor of consideration for companies planning long-term investments in sectors such as petrochemical.
According to a statement by FICCI, Pradhan's visit is primarily focused on "reengaging with the resource-rich Iranian upstream, downstream and petrochemical companies" to supply India's rapidly growing economy with a vital and steady source of fuel.
Iran's top oil official also touched on the exhausted issue of gas exports to India and hoped the two sides will come up with a concrete plan after more than 25 years of negotiations.
Iran and India have been in advanced negotiations on a large-scale project to supply Iran's gas through an approximately 1,400-km long subsea pipeline to India.
--- Debt Settlement
In a separate meeting with Valiollah Seif, governor of the Central Bank of Iran, Pradhan reassured the Iranian side that India will soon settle its accumulated oil debt to the Islamic Republic.
Indian refiners have to pay around $6.5 billion in exchange for crude oil they bought from Iran but were unable to pay for during the sanctions.
Pradhan said the payment will be made through three banks that Tehran has yet to announce.
Seif urged India to make the payment directly to the CBI-approved financial institutions, adding that Tehran wants its pending oil dues in euro.
According to Pradhan, the two sides had previously agreed the disbursement be made in US dollars.
The CBI chief said the Asian Clearing Union can facilitate debt settlements between all member states in the future.
He underscored strong banking relations as a prerequisite for boosting economic ties. "Indian banks can undertake the role of European banks in settling debts between the two countries at a faster pace."
Seif also called for fast-tracking the opening of branches of Iranian banks in India and expressed commitment to take measures to activate Indian banks in Tehran.
