‘Threats’ as Iran, India change their trading terms

Iran has retaliated against India’s decision to reduce the import of Iranian oil by a fifth over delays in awarding rights to discover a gas field to India’s national oil company.

India’s two largest crude oil importers from Tehran will cut their import from five million to four million tonnes in 2017-2018, reported the Indian Express, in an attempt to put pressure on Tehran to award the rights to develop the 12.5 trillion cubic feet discovery to the Indian state owned oil and gas company ONGC Videsh Ltd (OVL).

Iran dismissed the decision and the countries Oil Minister, Bijan Zangeneh, was reported by Indian news agencies as saying:

We cannot enter deals under threats… there are a lot of customers for Iranian oil and their demand surpasses our export capacity.

India is Iran’s second biggest oil buyer after China and was among a few which continued to import crude despite Western sanctions against Tehran. Since the sanctions were lifted last year, Iran has been accused of playing hardballs over award of rights to develop a gas field in the Arabian Gulf to OVL.

The gas field in question, Farzad-B, was discovered by OVL ten years ago. The project has so far cost the OVL-led consortium, which also includes Oil India and Indian Oil Corp (IOC), over $80 million.

Tehran reacted to the reduction by limiting the 90 day credit period it gave to Indian refineries to 60 days. Iran oil sale terms were said to be the most attractive for Indian refiners. Besides a liberal credit period, it also shipped the oil to India for a nominal 20 per cent of normal ocean freight.