Indo-Iran oil, gas deals stuck in pipeline again

Cooperation between India and Iran in the oil and gas sector has taken a beating with their second Joint Working Group (JWG) meeting, slated...

Cooperation between India and Iran in the oil and gas sector has taken a beating with their second Joint Working Group (JWG) meeting, slated for February 17-18, put off for the second time because of slow progress.

The meeting was first scheduled for December 13-14 but that time, New Delhi decided that “it would be premature to have the second JWG meeting in December 2003 as proposed by the Iranians”, says a government document. This time round, the advice came from Indian ambassador in Teheran that nothing much would be gained by attending it. The JWG first met in Delhi/Tehran in May where it decided that Iran would offer a discovered oilfield to India in exchange for New Delhi buying LNG from Iran.

However, the oilfields offered by Iran were found to be cost intensive. Subsequently, India was offered 40 percent in South Azadegan but it was asked to bid a price for the share along with other oil majors.

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But that option also received a jolt today with Iran signing a $2-billion deal with Iran to develop the oilfield. Under the pact, Japan’s Inpex Corp will get 75 per cent equity in the field leaving 25 per cent for National Iranian Oil Company (NIOC).

The progress on a deepwater natural gas pipeline between Iran-India, crossing through or outside Pakistan’s boundaries, is also tardy. Teheran is yet to resolve payment issues with route surveyor Gardline Surveys of UK after which the latter will transfer a large chunk of its study to engineering consultant Snamprogetti-Saipem for getting the last-mile sea-bed study conducted by another firm.

GAIL and NIOC last October agreed on a framework to resolve all outstanding issues with Gardline and decided to hold a joint meeting with Gardline and Snamprogetti this January to arrive at “a mutually acceptable framework”. But that meeting has not been held and is now likely next month.

Once Gardline hands over the data and reports, Snamprogetti is expected to take 3-4 months to complete the study. It is expected that the study could get completed only by September. However, LNG import from Iran has been moving in fits and starts even though a concern was raised earlier over Iran’s low level participation. Teheran has since then been asked to raise the level of their delegation so that the participants in the meeting are “authorised to decide on important issues”.