India to ask for rights to invest in oil reserves in Iran

India is on its way to ask Tehran for rights to develop ONGC-discovered Farzad-B gas field in the Persian Gulf even as it prepares to pay $ 6.5 billion in past oil dues.

Indian firms have so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe. The same was deterring New Delhi from claiming rights to invest nearly $ 7 billion in the biggest gas discovery ever made by an Indian firm abroad.

But with Iran and six world powers sealing an accord to curb the Islamic Republic's nuclear programme in return for ending sanctions, India is making a renewed pitching for rights to develop 12.8 Trillion cubic feet of gas reserves ONGC Videsh Ltd had found in 2008.

"We have been in negotiations with Iran over development of Farzad-B gas field. Now that sanctions will ease, we expect Iran to give us the developmental rights," OVL Managing Director Narendra K Verma told PTI.

Also, the easing of sanctions would mean India can freely buy crude oil from Iran. Sanctions had meant that New Delhi could import no more than 9 million tonnes of oil this fiscal, the same volume it had shipped from Iran in 2013-15.

"We have just heard of the deal but we have not seen any details of when the sanctions will be lifted. We are awaiting more details to decide on crude purchases," a top official with a refiner which buys Iranian oil said.

An oil ministry official said lifting of sanctions would also mean oil refiners will have to clear $ 6.5 billion in past dues on purchase of Iranian oil.

Since February 2013, Indian refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MRPL) have been paying in rupees to UCO Bank 45 per cent of their payment due on purchase of crude oil from Iran. The remaining has been accumulating, pending finalisation of a payment mechanism.

They had last year paid nearly $ 3 billion in six installments through a limited payment channel following start of nuclear talks between the West and Iran. The outstanding has since climbed to nearly $ 6.5 billion. Of this, Essar Oil owes about $ 3.5 billion and MRPL $ 2.5 billion. The rest $ 500 million is to be paid by Indian Oil Corp (IOC).

The official said the government expects that payment channels to open soon and Iran making a demand for clearing of past dues.

The historic nuclear deal struck today, sanctions imposed by the United States, European Union and United Nations would be lifted in return for Iran agreeing long-term curbs on a nuclear programme.

If approved by the US Congress, it would enable the holder of the world's fourth-biggest crude reserves to ramp up energy exports with the easing of international sanctions on exports in return for curbs on its nuclear programme.

(Image credits: Indiatimes)