India is reportedly seeking to use oil imports from Iran as a bargaining chip in their impasse over a giant Iranian gas field which New Delhi has been coveting for years.
Unnamed sources in New Delhi were quoted as saying that India’s state refiners planned to cut oil imports from Iran by a fifth in 2017/18 unless the Islamic Republic made concessions on the Farzad B field.
The offshore field in the Persian Gulf is estimated to hold reserves of 12.5 trillion cubic feet of natural gas with a lifetime of 30 years.
A consortium led by ONGC Videsh has submitted a $3 billion development plan to Iranian authorities but negotiations have got mired in bickering over the price and other issues.
Indian companies discovered the field in 2008, winning the right to develop it but Iran had to put Farzad B on a list of projects for tender in 2014 after the Indians dragged their feet on its development.
The Indians launched a fresh bid after international interest grew in the field following Iran’s nuclear accord with world countries in 2015.
Indian authorities have a habit of playing hardball with Iran in their dealings whenever Tehran comes under pressure from the US and its allies.
The new assertive stance taken by India appears to be linked to tough language being used by the government of President Donald Trump against Tehran, which is believed to scare investors seeking trade opportunities in the Islamic Republic.
India is Iran’s biggest oil client after China, having raised imports from the country since the lifting of sanctions on Tehran in January 2015. New Delhi was among a select group of countries which upheld dealings with Iran during the sanctions.
According to new tanker arrival data, India’s Essar Oil more than doubled oil imports from Iran in February compared with the previous month.
The refiner shipped in about 246,600 barrels per day (bpd) of oil from Iran last month, compared with about 118,000 bpd a year ago, Reuters reported on Friday.
Indian refiners, however, told a National Iranian Oil Company (NIOC) representative about their plans to cut oil imports by a fifth to 190,000 bpd from 240,000 bpd, the news agency quoted officials present at the meeting as saying.
Indian Oil Corp and Mangalore Refinery and Petrochemicals Corp will reduce imports by 20,000 bpd each to about 80,000 bpd. Bharat Petroleum Corp and Hindustan Petroleum Corp will together cut imports by about 10,000 bpd to roughly 30,000 bpd, the report said.
According to the officials, NIOC threatened to cut the discount it offers to Indian buyers on freight.