Iran’s Farzad-B Gas Field

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Recently, Iran has given the Farzad B gas field to Petropars, a domestic gas producer.

• The current deal will pave the way for daily production of 28 million cubic meter of gas over five years.
• Earlier, Iran decided to fund and develop a rail link under the second phase of the Chabahar Port on its own, where India was anticipating participation.

Farzad B Gas Field

• It is an offshore natural gas field located in Persian Gulf (Iran).
• In 2000, it was discovered by the ONGC Videsh Ltd (OVL) in the Farsi region, which is located between the Iranian and Saudi territories.
• In 2002, the exploration contract of the field was signed by Indian consortium comprising OVL, Indian Oil Corporation and Oil India.
• In 2009, the contract expired after declaration of commerciality of the field, based on the gas discovery, with reserves of more than 19 trillion cubic feet.
• Iran decided to give the development of the infrastructure projects to local companies instead of giving them to India. These are the reasons behind the move
  • Policy changes by Iranian government.
  • Iran’s unpredictable finances.
  • US sanctions.
• The Indian oil consortium was trying to secure the contract for development of the field and around 75 per cent of the deal was finalised by May 2018, when the US unilaterally withdrew from the Joint Comprehensive Plan of Action (JCPOA) or also known as the Iran Nuclear deal and announced sanctions on Iran.
• In January 2020, Iran informed India that it would develop the field on its own and would like to involve India appropriately at a later stage.
• Significance
  • India needs gas and Iran is one of the best options geographically due to its close proximity in all the countries in the Persian gulf region.
  • It could have improved India-Iran ties as the crude oil import from Iran remains impacted due to the US sanctions.

Impact on India

• The current deal in Iran comes despite India’s long-standing cooperation regarding the gas field and is indicative of the impact of the US sanctions on India-Iran energy cooperation.
• This is a setback for India’s energy ties with Iran as OVL had discovered the field and has been part of the ongoing cooperation. ONGC invested approximately USD 100 million.
• The Indian Ministry of External Affairs has not officially commented on the development yet.

(Image Courtesy: BS)

(Image Courtesy: ET)

India-Iran Relations

• Political relations
  • March 1950: Signed the friendship treaty.
  • April 2001: Signed the Tehran Declaration which set forth the areas of possible cooperation between the two countries.
  • January 2003: Signed the New Delhi Declaration which set forth the vision of strategic partnership between India and Iran.
  • August 2012: Indian PM visited Iran to attend the 16th Non-Aligned Movement (NAM) Summit held in Tehran.
  • May 2016: Joint Statement titled “Civilizational Connect, Contemporary context” was released with various MoUs/Agreements and a trilateral agreement on Transit and Transport signed between India, Iran and Afghanistan.
  • February 2018: 13 MoUs/Agreements including the contract for interim operations of Chabahar port and MoU on Cooperation in the field of Health and Medicine.
  • Both have in place several Bilateral Consultative Mechanisms at various levels which meet regularly.
    • Joint Committee Meeting (JCM) chaired at the Ministerial level. 
    • Foreign Office Consultations chaired at the Foreign Secretary level.
    • Joint Consular Committee Meeting at the level of Joint Secretary/DG.
  • There are regular bilateral exchanges at the level of National Security Advisors, Deputy National Security Advisors and Parliamentary level exchanges between the two countries.
• Economic and Commercial Relations
  • The bilateral trade during 2019-20 was USD 4.77 billion, a decrease of 71.99 per cent as compared to the trade of USD 17.03 billion 2018-19.
  • India-Iran commercial ties were traditionally dominated by Indian import of Iranian crude oil.
    • In 2018-19, India imported USD 12.11 billion worth of crude oil from Iran. 
    • However, following the end of the Significant Reduction Exemption (SRE), India has suspended importing crude from Iran.
  • India’s Exports: Rice, tea, sugar, soya, medicines/pharmaceuticals, man-made staple fibres, electrical machinery, etc.
    • Indian exports to Iran between 2011-12 and 2019-20 have grown by 45.60 per cent.
  • India Imports: Inorganic/organic chemicals, fertilizers, cement clinkers, fruits and nuts, leather, etc.
  • Both countries are negotiating a Preferential Trade Agreement.
  • Considering the importance of India-Iran economic and commercial relations, two Indian banks, State Bank of India and UCO Bank, have their representative offices in Iran.
• Connectivity
  • India is developing the 1^st Phase of Shahid Beheshti Port at Chabahar.
    • The Trilateral Transit Agreement (Chabahar Agreement) was signed by the three transport ministers of India, Iran and Afghanistan in May 2016.
    • India is now shipping 75000 MT tonnes of wheat to Afghanistan through the port.
  • Both sides have remained committed to the construction of the Chabahar Zahedan railway line which forms part of the transit and transportation corridor in the Chabahar Agreement.
• Humanitarian Assistance
  • India helped Iran in times of natural disasters and health emergencies.
  • India delivered aid that included PPE kits and PCR machines to Iran in April 2020 during the Covid-19 crisis.
  • Also, India provided 103 tonnes of aid to Iran during 2019 floods and supplied Malathion pesticide to fight desert locusts in June 2020.
• Cultural Relations
  • An Indian Cultural Centre in Tehran was inaugurated in May 2013 and was renamed the Swami Vivekananda Cultural Centre (SVCC) in 2018.
    • It organizes music/cultural/literary programmes/seminars on cultural/literary issues related to India and Iran on a regular basis.
    • The International Day of Yoga was organized in 2018, 2019 and 2020.
    • To commemorate the 150^th Birth Anniversary of Mahatma Gandhi (from October 2018 to October 2019), a series of events were organized.
    • The 550^th Birth Centenary of Sri Guru Nanak was also observed.
• Indian Community
  • The Indian community in Iran comprises around 5000 Indian nationals.
  • They are engaged in various professions as fishermen, seafarers, workers, university students and professionals.
  • There is an Indian school in Tehran run by the Kendriya Vidyalaya Sangathan (KVS) under the aegis of the Embassy of India.
• People to People Contacts
  • There is a high level commitment in both countries to promote and facilitate people to people contacts.
  • Indian pilgrims visit the Shia pilgrimage circuit in Iran (Qom, Mashhad, Hamedan) and Iraq (Najaf and Karbala) every year.
  • Annually, more than 20,000 Iranian tourists visit India and a large number of Iranian students pursue higher studies in medicine, pharma, engineering, humanities and other courses in India.

(Image Courtesy: BBC)

Source: TH