Iran anger at Indian disinterest in its oil sector

Vol 15, PW 4 (25 Aug 11) People & Policy

Iranian officials are growing impatient with India’s reluctance to implement an agreement signed nearly a year ago to increase co-operation in the hydrocarbon sector.

PETROWATCH learns M. Riahi, a senior official from Iran’s international affairs and commerce department, sent a stern email on August 15 to oil ministry additional secretary Sudhir Bhargava.

Riahi says Iran is still waiting for ONGC’s overseas exploration arm ONGC Videsh (OVL) to respond to its offer of a 40% stake in Phase-12 of the South Pars gasfield development project. More, Iran is waiting for an Indian LNG trading partner, like GAIL or IndianOil, to introduce a LNG licensor to set up a natural gas liquefaction facility.

Worse, India has not made any move to increase its participation in the Iranian E&P sector, even though “several fields were introduced to India” during the last joint meeting held between officials from the two countries in December 2010. Nor has there been any progress by India on setting up fertiliser factories in Iran, as discussed during the December meeting.

Finally, Iran is unhappy because OVL has made little progress in developing the Farzad B gasfield, which it discovered in 2009 at the offshore Farsi block. When contacted for a comment, a senior oil ministry official says Iran should be patient.

“I had a meeting with OVL about two months ago,” he said. “They have yet to complete ‘due diligence’ at Farzad B and South Pars Phase-12.

” But an industry observer believes India’s inaction is prompted by strict US economic sanctions against Iran, punishing companies and individuals who aid the development of its petroleum sector. In July 2010, US President Barack Obama signed into law the Comprehensive Iran Sanctions, Accountability and Divestment Act, further extending previous sanctions against Iran’s petroleum sector and prohibiting a range of foreign exchange, banking and property transactions with the country.