Petroleum minister M Veerappa Moily's master-plan to bring down the foreign exchange outflow by $20 billion may get an Iranian shocker, Indian newspaper "Business Standard" reported.
According to official sources close to the development, the Islamic republic has asked India to sign a production sharing contract for Farsi gas block in a span of three months, if it has accept 100% rupee payment. The ministry has already submitted a revised master-plan for the block in August, which is likely to see an investment worth more than $6 billion.
"Now, since we are in the need for more Iran imports, Iran is bargaining. They want us to sign the production sharing contract for Farzad B gas field in Farsi block soon," said a senior petroleum ministry official.
Earlier, Business Standard had reported that Iran is likely to reject India's offer to go for 100% rupee payment through UCO Bank in return for crude imports. The petroleum ministry was targeting to bring down forex outflow by about $8.47 billion payment for 11 million tonne of Iran crude in rupee.
ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd (IOC) and Oil India Ltd (OIL) had won the block in 2002 from National Iranian Oil Company. While OVL and IOC have 40% each, OIL holds 20% stake in the block. Both sides had agreed to finalise the issue, during the visit of Iran oil minister Rostam Ghasemi in May. However, with the European Union and the United States sanctions in place, it is highly unlikely for the Indian companies to go for a direct involvement in the block. However, India does not want to leave the project as the block has proven reserves of more than 12.5 trillion cubic feet of gas.
Last year, India was forced to pay for Iran crude through Turkish Halk Bank and its own UCO Bank, in 55:45 in dollar/rupee terms. Further Western sanctions in February this year has forced the country to go for 100% rupee payments. However, due to insurance issues for refineries and ships, major importers like Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corporation (HPCL) did not go for imports till August. India plans to import 11 MT of Iran crude during the current financial year. Iranian crude oil in Indian refineries came down in 2012-13 to 13.3 million tonnes from 18.1 million tonnes during the previous financial year.
"Even savings through rupee payments is unlikely, while the plan to explore Farsi seems to be not working out for about 11 years. This time, we are in the backfoot and Iran has an upper hand in the bargain," said a former ONGC executive, who does not want to be named.