With the global oil prices spiralling after fresh US sanctions against Iran, India is working hard to keep its energy export lines open – providing alternate insurance cover to ships and also accentuating work on Chabahar port located on the Gulf of Oman.
A shackled Tehran too is trying its best to cooperate with New Delhi. Visiting Iranian minister for roads and urban development Abbas Akhoundi here said on Friday that his country would hand over the strategic Chabahar port to India for operation and maintenance in a month.
Sources said after Hindustan Petroleum Corp Ltd (HPCL) was forced to cancel the purchase of an Iranian oil cargo two months ago due to insurance issues, Tehran has offered to transport the oil to Indian refineries using its own ships for almost free and has also extended credit limit, besides asking its domestic agencies to provide an insurance cover.
Also, to circumvent the banking problems triggered by the US sanctions, India, in a special arrangement, will invest in rupees, so far only allowed for Nepal and Bhutan.
As on Friday, a litre of petrol in Delhi cost Rs 79.99, a record high. In Mumbai, it was Rs 87.39. Diesel is now priced at Rs 72.07 a litre in Delhi and Rs 76.51 per litre in Mumbai.
Speaking to reporters on the sidelines of the Global Mobility Summit, Akhoundi, a day after India held 2+2 talks with the US, described Washington as an "outsider" to the region and underlined the need to strengthen the traditional relationship between India and Iran.
Sources in the Ministry of External Affairs said that at the just concluded 2+2 talks, the US side was apprised about critical role Iranian oil plays for India's energy security. US Secretary of State Mike Pompeo said that he had told the Indians "consistently that on November 4, the sanctions will be enforced."
Pompeo, however, clarified that waivers would be considered wherever appropriate and hoped to work with New Delhi. The top US official expected that the purchases of Iranian crude oil would "go to zero" from every country including India. "From whence they (India) purchase the other crude oil, we're happy to see if it's American products that are able to deliver for them."
The US is pushing all countries to halt oil imports from Iran after President Donald Trump in May revoked a 2015 deal between Iran and six world powers and ordered re-imposition of sanctions on the Islamic Republic. Some sanctions came in effect on August 6 and the rest, in the energy sector, will take hold on November 4.
Officials in Delhi draw satisfaction that Tehran was cooperative this time unlike in 2005 when India had voted against Iran at the International Atomic Energy Agency. Immediately after the vote in Vienna, Iran backed out form the five-million ton a year Liquefied Natural Gas (LNG) export deal and also put other relations on hold.
Citing Pompeo's assertion that the Trump Administration won't penalise strategic defence partners like India, government sources said New Delhi will be able to skirt the sanctions and keep its energy basket a float. "The sanctions aren't intended to adversely impact countries like India. They are intended to have an impact on the sanctioned country," Pompeo had said.
Officials said even though the US has offered to replace Iranian oil, the shipping costs would be astronomical. They said minimal shipping costs from the Persian Gulf and longer repayment plan makes Iranian oil cheap and competitive. Iran was the second-biggest oil supplier to India during the first quarter of this financial year, with state-run oil companies opting for the heftier discounts offered by the Gulf nation.
The Iranian minister held extensive talks with Union Minister for Road Transport & Highways Nitin Gadkari on handing over of the Chabahar port, a railway project connecting the port with Iranian town of Zahedan and also other infrastructure projects that India is undertaking. "India and Iran have the political goodwill that will help to overcome challenges created due to the US decision. Ours is not an artificial relationship but a relationship that goes back in history."
While Chabahar port may not be directly linked to oil exports, it opens up a new strategic transit route for India to link with Iran and Afghanistan bypassing Pakistan. It is expected to reduce transport cost for Indian goods by a third bringing a salutary effect on relations that include energy exports.
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