India may boost oil import from Iran

Indrani Bagchi TNN

New Delhi: India is looking at ways to intensify engagement with Iran after the nuclear agreement with the P5+1 over the weekend. A strategy session chaired by national security adviser Shivshankar Menon on Tuesday with senior officials from the ministries of finance, shipping and petroleum zeroed in on three sectors where India would try to do something extra for Iran. An Iranian ship, Dinayat, has been stranded at Mundra port in Gujarat for the past year-and-a-half over some payments owed to a Singaporebased firm. In recent months, Iran has asked India to pay off the ships debts from the huge amount of money kept in UCO Bank. India pays 45% of its oil payments to Iran in rupees. However, so far, India has refused to pay, because the ship is actually owned by Irans infamous Revolutionary Guards who come under UN sanctions. India was worried that making payments on behalf of the Revolutionary Guards may tantamount to violating the sanctions. But now, the government is looking for ways to circumvent this restriction to see if an exception can be made for Iran. India has declared its intention to develop Irans Chahbahar port, which could become an important alternative to Pakistans Karachi port. However, in the past year, since the Iranian government gave the final clearances, the delays have been on the Indian side. Finance minister P Chidambaram has added a killer clause to his permission on the port, by demanding a certain percentage return on investment from the port project. A naturally indolent Indian government has used this precondition as an excuse to delay work on the Chahbahar project. Sources said it had been difficult to get officials to put together a plan on the port. Equally, nobody at senior levels, Menon or foreign minister Salman Khurshid, have been able to muster courage to ask Chidambaram to modify his order. In his meeting, Menon gave officials six months to firm up plans and get on the ground in Chahbahar. The MEA came in for some special beating, because the foreign office has been sceptical about the success of the US-Iran agreement. Menon reportedly told them to refrain from anticipating outcomes. Other officials pointed to the difficulties in working with the Iranians, but Menon chided them for failing to exploit opportunities with Iran that could close once the US and the West returned to that country. Third, India may source additional oil from Iran in the coming six months, or even explore joint ventures in the oil sector in Iran. Iran has slipped to third position behind Saudi Arabia and Iraq as Indias oil supplier, dropping below the floor demanded by the US sanctions. Despite this, India has remained among the top two destinations for Irans oil, even during the sanctions. But now, India may try and make up the difference in a shorter period of time.