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US sanctions hit India, Iran gas field talks

US sanctions have stalled talks between India and Iran for the development rights of Farzad B gas field since sanctions are a huge execution risk making it hard to obtain finance and also the oilfield services companies, people familiar with the matter said.

French giant Total cancelled a $5 billion contract to develop the massive South Pars offshore gas field which indicates the wariness of foreign companies  in participating in Iranís exploration sector under sanctions.

The development of Farzad B has been delayed for years due to US sanctions as well as sluggish decision making by Iranian authorities. After staying away from the Iranian field during the previous sanctions years, the Indian consortium revived its efforts to obtain a licence to develop the field in 2016.

But blame game between India and Iran ended up in not reaching a deal; Iran accused India of inflexibility and India accused Iran of changing goal posts.

India imports almost 10% of its crude oil requirements from Iran and is in negotiations with the US for a sanctions waiver by offering to partly cut its purchases from the republic. Officials of the two countries are slated to meet next month to decide on this.

Indian officials will likely project the technical limitations of their 
refineries as well as increased purchases of the US crude oil lately by the Indian refiners to seek the exemption, people familiar with the matter said.

India, meanwhile, continues to import Iranian oil that comes with a longer credit period and lower freight charges. Iran has offered its carriers and insurance for cargoes turned away by other shippers and insurers due to the sanctions.

Some US curbs against Iran took effect earlier this month and those related to the 
petroleum sector would be effective from November, which is when their impact will become clearer to Indian oil companies.

 


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