Buy more oil,will re-route pipeline: Iran

The goody bag would be outlined during Oil Minister Rostam Ghasemi visit on May 27 to ascertain India’s solidarity with Iran through increase in crude oil imports to volumes higher than 2011 levels,said sources.

Under pressure from the United States,India’s crude oil imports have sharply dwindled since 2011. From 18.1 million tonnes in 2011-12,it fell 26.5 per cent to 13.3 million in 2012-13 as the United States and European sanctions made it difficult to ship oil from the Persian Gulf nation.

Foreign office officials said they favour shoring up crude from Iran to take advantage of opportunities when the sanctions are lifted. They felt that the relationship should be bolstered because of India’s permanent interest in Iran which surpasses the current international imbroglio.

They said a “strategic cooperation” agreement was in the works that emphasises Iran investing a part of the surplus revenue from the increased crude imports in projects such as a sub-sea pipeline from the Persian Gulf as well as an LNG project near Chahbahar port to feed gas to India.

These projects would circumvent concerns that India has raised over the security of the proposed onland Iran-Pakistan-India gas pipeline. The IPI pipeline,so-called the peace pipeline,has been in talks for almost a decade with New Delhi refraining from making a commitment.

The National Iranian Oil Company has been authorised to negotiate on gas supplies through a proposed offshore pipeline or as LNG.

If India agreed to increase crude imports,Iran has assured that it would be willing to drop its price. New Delhi recently requested Tehran to exclude Indian refiners from the Asian Premium of $1 to 1.50 a barrel. Asian customers,because of their dependence to Middle East crudes,have been paying a premium compared to their US and European Union counterparts.

Besides increasing the crude imports,Iran’s second demand is that OVL quickly invest and develop the Farzad-B gas field for which it was willing to sign a production sharing contract (PSC) with OVL. The field is estimated to hold 21.68 trillion cubic feet of reserves of which 12.8 TCF can be recovered.

OVL discovered Farzad-B in the Farsi offshore block in 2008 but has not signed the development contract because Iran’s present buy-back system pays contractors in oil and gas equal to the investment and a nominal rate of return.

Under PSC,OVL would get equity equal to its investment and oil and gas in proportion to its equity.

As an incentive to break free from the Unites Staes sanctions threat,Iran is willing to offer India two more oil and gas fields — Esfandiar and Darquain — for development under a similar umbrella. Iranian Offshore Oil Co has been instructed to nominate the fields and negotiate the terms with OVL.