India seeks rights to operate discovered oil field in Iran
25 May 2016 11:35 PM GMT
Indian Oil Corp (IOC), the nation’s largest oil firm, has proposed to Iran that it be given rights to operate and produce crude oil from the discovered field to help move away from buyer-seller relationship to a strategic partnership, sources privy to the development said. The oil produced from the field can then be shipped home, the IOC has said. IOC had last fiscal imported 1.2 million tons of crude oil from Iran. In the fiscal year that began from April 1, it is looking to raise it by at least three-fold.
Prime Minister Modi’s visit to Iran was aimed at boosting trade and commerce between the two countries. His trip came just months after lifting of international sanctions on Iran following Tehran’s historic nuclear deal with the Western powers over its contentious atomic programme. Besides IOC, ONGC Videsh Ltd has also sought two discovered fields from the 16 fields that Iran is likely to put on auction shortly.
The fields sought by OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is besides the Farzad-B offshore field for which it is in advanced talks to secure developmental rights.
OVL had in 2008 discovered the Farzad-B field in the Persian Gulf. The field holds 12.5 Trillion cubic feet of recoverable reserves. Sources said Iran has so far not responded to the requests by the Indian firms. It has, however, shown willingness to give Farzad-A, which holds 283 billion cubic meters (bcm) of reserves.
The field besides holding smaller reserves is more challenging, OVL feels. Sources said India may import as much as 20 million tonnes of crude oil from Iran in 2016-17 fiscal, up from about 11 million tonnes in the previous year.
This follows lifting of sanctions against Iran in January. Till 2010-11, Iran was the second biggest supplier of crude oil to India after Saudi Arabia. Fresh US sanctions in 2010 led to imports, which were 18.5 million tonnes in 2010-11, to fall to 11 million tonnes. Iraq is now the second biggest supplier of oil to India.
Sources said India has also expressed interest in investing in chemicals, petrochemicals and fertilizer plants if Iran provided natural gas at low prices. It also is looking at setting up an ammonia/urea plant in Chabahar Free Trade Zone with long-term off-take of urea to India. While Mangalore Refinery and Petrochemicals Ltd (MRPL) and Essar Oil Ltd -- the biggest Indian buyers of Iranian oil -- are likely to maintain buying at around 5 million tonnes each, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) may begin importing oil from the Persian Gulf nation.
‘Chabahar pact a gateway to central Asia for India Inc’
Chabahar Port agreement with Iran is a landmark development that will help Indian companies boost their engagement in Central Asia and also significantly reduce the transportation cost, industry chamber Ficci said on Tuesday. “Prime Minister Narendra Modi’s outreach to Tehran has infused vigour into the momentum to develop connectivity, infrastructure and in India’s energy security goals,” the industry body said. India and Iran yesterday signed a bilateral pact to develop the Chabahar port for which India will invest $500 million, during Modi’s visit to the Persian Gulf nation. The key agreement signed was a contract for development of Phase I of the
Chabahar port on the southern coast of Iran by an Indian joint venture.
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