Oil & gas projects in focus as India's Narendra Modi plans Iran trip

Oil & gas projects in focus as India's Narendra Modi plans Iran trip

Tehran, Iran, May 11

By Mehdi Sepahvand - Trend:

Indian Prime Minister Narendra Modi is set to visit Iran in late May. As he prepares for the two-day trip, energy projects which have long been discussed between the two countries, are the most relevant topics of discussions.

Modi, as the top Indian official, may prove to be the harbinger of a will to push the discussions into some final agreements. Tehran invited Modi for the visit in January, which Modi accepted.

The first of Iranian energy projects now available to India is the Farzad-B oil field. The field is a rich source of oil and gas condensates in southern Iran. A preliminary contract for the exploration and expansion of the field was signed between Iran and a consortium of three Indian companies in 2000. The Indian side however went no further than the exploration phase.

Iranian Deputy Oil Minister Roknoddin Javadi recently said it is predicted that the contract for developing the gas filed will be signed by Iran and India in the current year.

India is also interested in running projects in Chabahar Port in southeastern Iran. Recently, New Delhi proposed investing $20 billion in petrochemical projects, including LNG plants, in the area. The port has also caught India's eye as a transport joint in that it could be used to beat China's Gwadar port project in neighboring Pakistan.

In April, Iranian Oil Minister Bijan Zanganeh called on India to invest in Iran's petrochemical projects saying that the country is ready to provide the Indian companies that invest in petrochemical projects with natural gas. The oil minister also voiced Iran's interest in exporting gas to India.

Over the past decade, Tehran held talks with Delhi for exporting its gas to India through a pipeline crossing Pakistan, but later India opted out of the project. Iran holds 971 trillion cubic feet of gas and its main gas fields in the Persian Gulf are very easy for India to reach.

Now, Iran and India are pursing the transfer of gas via pipe on the seabed. So far the Indian side has proposed to construct a $4.5 billion seabed pipeline for taking Iran's gas.

Indians have also put forward a project for the construction of a LNG production unit in Chabahar.

India has interest in setting up a liquefied natural gas (LNG) plant and a gas cracker in Chabahar, said Minister of State for Petroleum and Natural Gas of India Dharmendra Pradhan while on a visit to Iran on April 11.

There is also the Binaloud oil field. A consortium led by India's ONGC Videsh in 2008 discovered the field off the Farsi offshore block. The consortium is now keen to seal a contract for developing the oil field.

Furthermore, India is currently the main consumer of agricultural fertilizers and Iran is a main producer of the products. India is looking forward to investing $20 billion in fertilizer plants in Chabahar through a credit line.

Four units are defined for the production of ammonia and four other units for the production of methanol in Chabahar, all of which have caught India's eye.

The credit line defined for the fertilizer projects, however, seems also to have something to do with India's oil debt to Iran. New Delhi has not been able to return $6.5 billion to Iran for the oil it has purchased from the Islamic Republic during the time of sanctions.

India is a major importer of Iranian oil. Its oil imports from Iran fell by about a quarter in 2015 dropping to 220,000 barrels per day as Indian refiners slowed purchases early in the year to keep imports within the limits of international sanctions against Iran.

However, in May this year Indian refiners together imported 506,100 bpd oil from Iran, a jump of about 135 percent from February. Iran holds 132 billion barrels of oil. India's oil output covers only one tenth of its need with a vast area and a population of 1.3 billion.

Mehdi Sepahvand is Trend Agency's Tehran-based reporter. Follow him on Twitter @mehdisepahvand

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