India's Readiness to Invest $6.2 Billion in Iran's Gas Project

On the eve of President Hassan Rouhani's visit to New Delhi, several diplomats told Reuters that he expects India to invest in Iran's economic and oil and gas projects despite U.S. pressures. Meanwhile, the Indian newspaper 'Economic Times' reported that an Indian oil company has proposed a $6.2 billion investment in the 'Farzad B' gas field. Reuters reported on Wednesday, February 14, citing unnamed diplomats, that Mr. Rouhani's focus during his trip to India is on attracting foreign investment, while the U.S. has begun a new wave of pressure to re-examine the nuclear deal and impose new sanctions. The report adds that India is trying to develop the Chabahar port in southeastern Iran to access markets in Afghanistan and Central Asia without relying on its regional rival, Pakistan. 'However, this project is progressing slowly due to concerns about the Trump administration withdrawing from the nuclear deal.' Reuters writes that India intended to invest $20 billion in not only Chabahar but also other projects such as petrochemicals, railways, and other industries in Iran after the nuclear deal, but the only progress made has been in the Chabahar port project. The report adds that Iranian officials attribute this to India's caution regarding U.S. sanctions, and Rouhani wants to urge India to adhere to its commitments during his visit to New Delhi. Gholamreza Ansari, Iran's ambassador to India, said last week that several projects, such as the construction of a gas pipeline, exist to enhance bilateral relations, which are in the interests of both countries and the region. He referred to the underwater pipeline from the 'Farzad B' gas field in the Persian Gulf to India, for which the Indian company 'OVL' had previously proposed an $11 billion investment to develop this field and construct the pipeline to India. However, Bijan Namdar Zangeneh, the oil minister, announced last spring that the Indian proposal for gas prices was so low that it left no profit for Iran. Iran's rejection of India's proposal led New Delhi to resort to pressure and announce that it would significantly reduce oil imports from Iran in the current financial year. India's financial year begins almost simultaneously with Iran's solar year. Reuters reported on January 31 that India's oil imports from Iran decreased by only half a percent in 2017, but statistics show that in the final months of the year, Indian refineries significantly reduced their purchases of Iranian oil, and this decline is likely to continue into the first quarter of the year, which is the end of India's financial year. Now, the 'Economic Times' of India, in a report published on Wednesday, has written, citing informed sources, that 'OVL' has this time proposed a $6.2 billion investment for the development of the 'Farzad B' field, which does not include pipeline construction. However, Iranian officials believe that the cost of developing the gas field itself should not exceed $5.5 billion. Rouhani is scheduled to travel to India on Thursday and will meet with the country's Prime Minister. Reuters writes that the parties are expected to sign a contract that allows India to begin operating the first phase of the Chabahar port. This port is located about 72 kilometers from Pakistan's Gwadar port, which is being developed by China. The first phase includes an investment of over $85 million from India to launch two docks in exchange for a 10-year lease. However, India claims it can invest $500 million for the development of the entire project. Reuters has reported, citing Indian officials, that potential U.S. sanctions have cast a shadow over India's decision to develop this project.