India's OVL could resume oil and gas hunt in Iran as Trump era wanes

ONGC Videsh (OVL), the overseas investment arm of the state owned Oil and Natural Gas Corporation Ltd (ONGC) could resume exploration work in Iran notwithstanding the hiccups related to Farzad B gas reserves. Sources said that the exit of US President Donald Trump could ease the contours of sanctions on Iran. Even as President elect Joe Biden, who is scheduled to take charge on January 20, may not lift sanctions immediately, he “would go soft,” on Iran which will allow other countries including India and several other western economies to reset their ties and economic relations with Iran.

According to people familiar with the development, India may not be able to resume oil imports from Iran soon as it has already sealed contracts with other supply sources, New Delhi is already looking at starting explorations in the region. The sources also said that the development has taken place in the last few weeks as “relations between Iran and China remain uncertain,” though earlier in the year, the two countries thrashed out a $400 billion deal.

“The $400 billion deal has been announced by China but there has been no concrete plan or blueprint to support the execution of the same. At the same time, India and Iran have been close allies for years and the latter considers New Delhi to be a more reliable partner than others,” one of the sources said, adding that Iran is “very matured” when it comes to politics and diplomacy.

“Iran will never put all its eggs in one basket,” the source said.

According to news platform <em>Foreign Policy</em>, Iranians have long had a clear preference for all things Western. “They also tend to be prejudiced against Chinese products and services, even when they are comparable in quality and lower in price than Western equivalents. Even Iranian state media was known for subtly insinuating the inferiority of Chinese-made goods and promoting other cultural and political biases toward China,” an article in Foreign Policy noted.

<strong>Confusion over Farzad B gas reserves</strong>

In 2008, OVL had discovered a huge gas field in Farzad B, with a total reserve of around 21.7 trillion cubic feet of which around 60 per cent is recoverable. Once the US sanctions kicked in, India’ had to reduce its involvement in Iran’s economic sphere.

After the Trump administration announced in May last year that it would end all sanction waivers for countries which allowed purchase of oil from Iran, India was forced to halt supply of crude from the West Asian country. “Naturally, this did have an impact on India-Iran bilateral relationship, though New Delhi has been making all attempts to ensure that the message is passed to Iran that it continues to remain a dear ally,” another analyst said.

“Now as global political dynamics could change with the change in the White House, India is hopeful of fruitful relations with Iran,” the analyst said.

Iran, which has been economically hit, had also increased its dependence on China at a time when it was isolated due to the sanctions. “But now with political framework changing, Tehran which has never been a natural partner to Beijing is also opening up to investments from other countries and India could benefit hugely,” the analyst said..