Policy
Rise In Crude Oil Prices Widens India’s Trade Deficit
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Trump’s Withdrawal From Iran Nuclear Deal To Hit India
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Risk Of Being A Petrol / Diesel Retailer In India
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Revised Biofuels Policy: Govt. Groping In The Dark
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IOC’s LNG Terminal To Test Gas Demand On East Coast
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Regulation
PMT Fields Unlikely To Be Shut After Shell India’s Exit
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ONGC Advised To Consider Tie-up Overseas For Shale
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High Hopes About Discovered Small Fields Round-II
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Jet Fuel Poised For A Major Surge In Domestic Market
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Alternative Energy / Fuel
Permission Granted For 100% Ethanol–run Vehicles
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New Projects
CTCI Wins LNG Receiving Terminal Tender In India
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RIKA Biofuels To Invest $100-150 Million To Build Bio CNG Plants In Punjab
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BPCL To Commission LPG Bottling Unit At Odisha
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Market Watch
Confidence Group Launches ‘GoGas Elite’
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STFC To Offer Fuel Credit To Customers Via HPCL Outlets Digitally
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Companies
L&T Hydrocarbon Engineering Ltd.
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L&T Hydrocarbon Bags Rs 38 Billion Worth Orders
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PNGRB Appoints CRISIL For Framing Gas Trading Hub Regulations
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Press Release [FREE Access]
Petro Intelligence » Rocky Ties With Iran
by R. Sasankan

Hassan RouhaniA cocktail of volatile scenarios have started to rock India’s already prickly ties with Iran, threatening to undermine the relations that the two countries assiduously built up over the years. Trade relations between India and Iran hit a new low last year when Iran appeared to freeze out India’s public sector oil and gas entities from participating in the development of the Farzad B field – a prospect that the Indian had started to expect was in the bag because of the support they had extended to Iran during its dog days including the discovery of the giant gas field. That development wrecked the relations between the two countries with each side embarking on a perilous course of tit-for-tat retaliation. India reduced its crude imports from Iran and the latter hit back by reducing the freight discount. There was one brief stab at restoring ties during the recent visit of Iranian president Hassan Rouhani to India and his meeting with Prime Minister Narendra Modi. Iran agreed to restore the freight discount on the sale of crude to India and, in turn, India pledged to import more crude oil from Iran. Indian PSUs were invited to submit a bid to develop a part of Iran’s Azadegan field for which quite a few international giants are in the fray.

Narendra ModiIf there was anyone who was optimistic about a revival of friendly ties with Iran, he would have to reconsider his position, especially after Iran opted last week to invite Pakistan and China to participate in the Chabahar port project. This sudden overture to India’s bitter foes has caught India’s external affairs ministry by surprise even though it has tried to mask its obvious dismay over the development.

“India’s relationship with Iran is tottering,” said an expert on Iranian affairs. India may have good reason to feel miffed by this sudden development. The first phase of the Chabahar port was developed with India’s help and it was inaugurated four months ago, opening a new strategic trDharmendra Pradhanade route connecting Iran, India and Afghanistan while bypassing Pakistan. This port was perceived as a counter to Pakistan’s Gwadar port which is being developed with Chinese investment. In November last year, India delivered the first consignment of wheat to Afghanistan through the Chabahar port and followed that up with four other shipments. India was planning to rope in Japan to help develop the Chabahar Port. But Japan shied away fearing further US sanctions on Iran. By inviting China and Pakistan to participate in the Chabahar port, Iran is once again trying to convey its deep-seated grievances against India over its dramatic shift in its foreign policy. India, on the other hand, feels it has been wronged by Iran, especially after all the help it extended to that sanctions-hit state. Both sides are now bickering over everything and the whole caboodle of economic ties and trade relations seems to be up in the air.

So, what precisely went wrong? A major issue appears to be the India’s growing proximity to Israel. The UPA government used to keep its ties with Israel under the wraps. But the Narendra Modi government does not seem to believe in such diplomatic niceties and refuses to play a dissembling game. Local Iranian politics demands that a friend of Israel be characterised as an enemy of Iran. Remember, Iran’s supreme leader Ayatollah Khomeini issued an appeal to the people of Kashmir to revolt against the “colonisers” the day before Prime Minister Modi visited Israel. Iran has strong likes and dislikes about the people it trades with. Normally, trade relations are conducted with a touch of diplomacy, but Iran does not follow such a style. Iran’s public sector executives in charge of petroleum trade feel uncomfortable in dealing with a couple of heavy weights in India’s petroleum industry. They believe that petroleum minister Dharmendra Pradhan and D.K. Sarraf, former ONGC chairman, are biased against Iran. Of course, this could be an erroneous perception. Both Pradhan and Sarraf are known toD.K. Sarraf aggressively protect the country’s interests. The fact that Iran’s perception is not shared by Prime Minister Modi was clear after he rewarded them for their performance: Pradhan was elevated to a minister with cabinet rank and Sarraf, on superannuation, was appointed as the downstream regulator.

Iran believes that these developments only reinforce their suspicions about India’s intentions. However, the most substantive issue, in my view, is India’s refusal to join the Iran-Pakistan-India (IPI) gas pipeline that was proposed more than a decade ago. Iran has always been keen to see India purchase its natural gas and, consequently, expected India’s support to the IPI pipeline. Iran was also willing to transport CNG to India through special tankers by sea. Iran has large proven natural gas reserves of 33.5 trillion cu.m, second only to Russia’s 48.7 trillion cu. m. Eighty per cent of Iranian natural gas reserves are located in non-associated fields. Although the proposed pipeline was supposed to traverse Pakistan to reach India, Iran knew that Pakistan would not pay for its gas. The viability of the pipeline was heavily dependent on the sale of gas to India, which was expected to become a huge market for Iranian gas. The Indian government has never been averse to buying Iran’s gas but was prevented from doing so by the US administration which branded Iran as one of the three evil powers, with North Korea and Iraq being the other two. India shied away from the pipeline citing security reasons, as the pipeline would have to pass through terrorist –infected areas in Pakistan.

Iran was obviously annoyed when India readily joined Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline which would also have to traverse the same insecure areas of Pakistan.

It is an acknowledged fact that one of the hidden conditions for the US support for India’s civil nuclear deal signed during George Bush’s tenure was the that India would not join the IPI gas pipeline. The TAPI pipeline has the US support though it is unlikely to become a reality in the near future. President Donald Trump seems to have hardened his stand against Iran from the position that George Bush had taken. He has threatened fresh sanctions against Iran. Israel is egging him to do so. India faces the prospect of walking a tightrope as its relations with Iran start to crumble. Delicate diplomacy on both sides is the only way to rescue the situation. Otherwise, an economic relationship that has been profitable for both sides for decades will sink into a quagmire.

 



To download the latest issue 'Volume 25 Issue 4 - May 25, 2018', click here
Petro Intelligence [FREE Access]
Popular Angst: From Nadigram To Ratnagiri
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Winds Of Change Force Iran To Drop The Bluster
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India: Going From A Pawn To A King On The Oil Chessboard
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Refinery Talks With Aramco: What’s At Stake?
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Foreign Investment
Air Products Unveils World-Scale Industrial Gas Complex at Kochi refinery
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Overseas Investment
ONGC Videsh Keen To Expand In Latin America
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Gas Scene
Domestic Gas Scene in April 2018
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Update: CGD Factsheet as of April 2018
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International Gas/LNG Prices and Domestic Gas Price
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CGD Sector’s Projected Growth In Coming Years
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Update: Source-Wise LNG Imports and List of Importers in February 2018
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Sector-wise Gas Consumption of Domestic Gas and RLNG in January 2018
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A National Gas Grid Still Far Away, But Making Progress
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India’s Cautious Shale Exploration
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Gas Sourcing & Sector Wise Supply – up to Q3 FY 2018
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CNG/PNG: Attractive Fuel Economics
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PNG Status As On October 1, 2017
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CNG activities in India as on 1st October, 2017
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Gas Sector Growth - China and India
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Gas share in Energy-Mix India
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Gas Share in Energy in select countries
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Existing Petrochemical units, their capacity and feedstocks
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Basin-wise Exploratory Inputs Expended by Private/JVs under PSC Regime
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India’s Solar Scene
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Exploratory Efforts Under Nomination, PSC Regimes
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Installed Solar PV capacity in select countries
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Kochi Refinery (BPCL) Flow Diagram
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Domestic oil & gas production vis-ŕ-vis overseas production
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India’s Imports & Exports of Petroleum Products in March 2018
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Region-Wise Import Of Crude In March 2018
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Power Situation In March 2018
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Exploratory Efforts By ONGC And OIL, Private Parties/JVs
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Appraisal status of Indian Sedimentary Basins
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Basin-Wise PEL & PML With Private/ Joint Venture Companies as on 1st January, 2018
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PEL and PML held by ONGC and Oil India Ltd as on 1st January, 2018
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India’s Sedimentary Basins & Their Contribution To Oil & Gas Production
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Foreign Direct Investment Inflows: An Update
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Update on Cairn India Ltd’s producing Barmer block, Rajasthan
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14 Oil & Gas Field Development Projects under implementation of ONGC
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Basin-wise break-up of proven and estimated hydrocarbon reserves
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ONGC Crude Oil Production Projection by 2022
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Break-up of Petroleum Products Consumption (PSU and Pvt.)
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ONGC Takes Up 6 Major Projects worth Rs 77 Billion
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India’s Declining Self-Sufficiency in petroleum
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Tenders [FREE Access]
Vedanta/Cairn Oil And Gas
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