India-Iran energy relations may have got stuck with gas pipeline and LNG deal not making any progress, but NIOC is keen to expand its operations in India.
NEW DELHI: India-Iran energy relations may have got stuck with gas pipeline and LNG deal not making any progress, but National Iranian Oil Company (NIOC) is keen to expand its operations in India.
NIOC has sought permission from the government to open a branch office in the country for undertaking marketing activities here. The Reserve Bank of India has referred its application to the ministry of finance that has sought the views of the Union petroleum ministry.
A source involved in the process said the ministry of petroleum was supporting the application. When asked whether there were exchange rate- related hitches in the process, he said there “were no problems”.
India buys crude oil from Iran through the government-owned NIOC. About $6-8 billion worth of Iranian crude oil is imported into the country.
All Indian refiners, including government-owned Indian Oil Corporation, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation, Reliance Industries Ltd, Essar Oil and Mangalore Refinery and Petrochemicals Ltd buy Iranian crude.
Besides purchasing crude oil, India has been unable to achieve much from its energy relation with Iran, though the visiting Iranian minister for economic affairs and finance Davood Danesh Jafari told reporters on Wednesday that Iran was willing to renegotiate the LNG contract signed in Tehran during the tenure of Mani Shankar Aiyar as the petroleum minister in 2005. The deal has been stalled ever since due to issues relating to price.
The branch office would mainly cater to the needs of these refiners but sources said the Iranian company might also look at new business areas like refining. The opening of the branch office is seen as a step in this direction.
Deals with Iranian companies, especially those relating to the sale of petroleum products, have reportedly run into exchange rate-related problems because of US sanctions.
A Reuters report recently said RIL has stopped exporting petroleum products to Iran due to the problem in securing letter of credit.
The report said BNP and Calyon, the investment bank arm of Credit Agricole, stopped offering Letters of Credit (LCs) — a standard form of payment guarantee in the oil trade — because of political pressure from the West.
“None of the banks that have something to do with the United States were willing to open (LCs) ... because of US pressure,” a senior RIL source was quoted as saying.
m_jyoti@dnaindia.net
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