Attractive $2 gas attracts Indian firms to Iran

Vol 18, PW 25 (13 Aug 15) People & Policy

Unconfirmed talk that the Iranians will offer a gas price of around $2/mmbtu for 25 years is attracting Indian companies to invest in petrochemical and fertiliser projects in and around Chabahar port in the Persian Gulf.

India's government is trying to act quickly to put together a consortium of companies to develop Chabahar as the end beckons for economic sanctions against Iran. Among those approached by the government are the Adani group and state-owned companies GAIL, IndianOil, NTPC and fertiliser co-operatives IFFCO and KRIBHCO.

Nitin Gadkari, surface transport minister, signed a MoU in May with Iran to lease two established terminals at Chabahar and invest around $85m to further develop the port and associated facilities. In addition Indian companies are considering an additional Rs15,000cr ($2.3bn) investment to set up petrochemicals and fertiliser factories using cheap Iranian gas to lower production costs before exporting finished products back to India or nearby Central Asia and Afghanistan.

Back from a visit to Iran, former oil ministry joint secretary Sunjoy Joshi, director of Delhi-based Reliance-promoted think tank Observer Research Foundation, says India should not expect special favours or deals from Iran and must act fast so these opportunities are not lost to the Chinese. "Chabahar has great potential but with Iran opening up," says Joshi, "competition will be intense."