Let me begin by stating that the issue I raise here is totally unrelated to my Indian affiliation, and hence I should be able to express my views unbiasedly. The present dispute between Iran and India over the former’s supposed dilly-dallying awarding the contract to develop the Farzad B gas field, has become a matter that many in the oil and gas industry deem unnecessary.
As the situation stands now, a number of India’s state-run refiners, which are the largest buyers of Iranian crude, have decided to reduce imports from Tehran to 4 mtpa in 2017-2018 from 5 mtpa in the previous year. This is apparently a pressure tactic to coerce Iran to award the Farzad B gas field project to its discoverer – India’s state-owned ONGC Videsh Ltd.
Iran is being assertive on its stand and taking its own time to evaluate the market’s interest for this project, in order to get the best deal for itself. In retaliatory rhetoric, Tehran’s Oil Minister Bijan Zangeneh has dismissed India’s move, saying “we cannot enter deals under threats.”
India’s claim to the Farzad B project lies in the fact that a consortium of its state-owned companies, led by ONGC, discovered the natural gas field in 2008, and hence has the natural right to operate it. Later in 2010, the consortium submitted plans to develop the field, but could not obtain permission to do so due to the US-led economic sanctions, prompting Iran to put up the block for a fresh bid. However, in 2016, when the sanctions were lifted, the offshore block evoked interest from many investors, making India’s position uncertain.
During the sanctions period, which had virtually crippled the Iranian economy, India was among the few countries to continue all forms of trade, ensuring vital supplies reached Iran and even going to the extent of switching over from the US dollar to the Indian rupee as the trading currency. Thus, what is hurting the Indian side most is Iran’s perceived ‘betrayal’ of sorts.
In the light of this scenario, both parties need to act with wisdom and let reason dictate the terms of resolution over sentiments. While India has a legitimate business claim to bag the rights to develop and operate Farzad B, it has to recognise that ultimately it is Iran’s asset and Tehran is free to decide what best to do with it.
Just before I sign off, want to gently remind you that nominations for the Awards this year have opened, so please start sending us those sterling entries.