The landmark nuclear deal between Iran and US-led allied nations which will lead to gradually lifting of sanctions from the Persian Gulf nation, is going to be a huge plus for India in terms of exploring business opportunities and addressing the pending payment issues with that country. Also with the re-entry of Tehran as a major crude producer, global prices could again face a possibility of falling to $40 a barrel mark, a development which could bring down prices petrol prices in India.
Industry watchers feel that India will not only look to consolidate its position as the second largest buyer of crude oil from that Iran, but will also aggressively explore possibilities of increasing its presence there by collaborating in the development of Chabahar Port, seeking transportation of gas – especially RlNG, and improving trade. According to oil industry experts, though Iran may take some time in reaching its normal crude output levels of 5 million barrels per day, depending on how soon the deal becomes operational (which in turn will depend a lot on how much Tehran sticks to the conditions of the agreement), once this happens, it is going to be a big negative for crude as a globa l commodity.
This would be due to the fact that the markets across the world are already on ‘negative’ on oil due to over-availability of the commodity, and more so because Saudi Arabia’s output has refused to wane and also major nations like China have further strengthened their strategic reserves of crude. Iran, owing to years of US-led sanctions on it, had seen its crude output falling to 1.5 million barrels a day. Tehran’s re-emergence as a major crude producer though is going to be a big positive for India. According to Debashish Mishra, Senior Director (Deloitte India), New Delhi, which has been paying Tehran in rupee denominations (for dues which it owes to the Islamic nation mainly on account of crude oil imports from there, and the outstanding amount is to the tune of $8.8 billion) because of sanctions imposed on that country, may soon start repaying in dollar terms once the nuclear deal comes into force.
Apart from this, India could also increase its imports from Iran, which it had drastically reduced over the years owing to pressure from US and other nations. Interestingly, despite cutting down its imports from that country, India continues to be the second largest buyer of Iranian crude after China. New Delhi could consolidate that position now, Mishra said. Also, he added, India can now gradually look at increasing its role in developing Iran’s Chabahar Port, a project on which New Delhi has been quite bullish as it will help counter competition from China. In addition to this, transportation of natural gas from Tehran, especially RlNG, can be another option which India can explore, industry sources said.
Experts feel that it will take almost around six months to a year in making the US-Iran nuclear deal operational, as Tehran has to comply to a lot of conditions before the sanctions imposed on it are completely lifted. However, the inking of the deal itself has sent positive signals across the globe and India can especially fast track its crude trade with that country to exploit the rejuvenated sentiments. Earlier after marathon talks, the world powers and Iran on April 4 had agreed on the framework of a potentially historic deal aimed at scaling back Tehran’s nuclear programme and relieving the Islamic Republic from the sanctions.