In a strong rebuff to the US and the European Union (EU) sanctions on Iran that have curbed gas and oil supplies from the Persian Gulf nation, India has decided to set up a gas-based urea plant in Chabahar region of that country. The move will not only ensure long term urea supply to New Delhi, but is also seen as a counter to China’s growing interest in the region.
The Prime Minister’s Office (PMO) has directed the Petroleum and Fertiliser Ministries to work out the modalities of setting up the proposed plant, which is to be set up in a joint venture (JV) with Iran. According to sources familiar with the development, the Ministries have been asked to commission a study on the prospects of setting up the plant within two months.
In fact, sources pointed out that the PMO has specifically referred to Chabahar as the preferred location for the proposed plant due to its strategic importance.
Apart from being seen as a counter to Beijing’s ambitious designs in the Persian Gulf region, the move also sends out a clear signal to the US and Europe that despite their efforts to clamp down sanctions on Tehran, New Delhi is not overtly perturbed by the developments as it has always maintained that the sanctions don’t have any impact on its energy supplies from the Islamic nation.
The issue of setting up the gas-based urea plant may also crop up during External Affairs Minister Salman Khurshid’s upcoming Iran visit between May 3-5, this year.
While the actual capacity of the proposed plant is yet to be decided, the PMO is learnt to have directed the Ministries to look for a strong Indian as well as Iranian entities as JV partners through discussions with Tehran. Deliberations between both the nations had been going on since quite some time on setting up the urea plant, but seemed to have picked up steam only recently after New Delhi sensed Beijing’s designs in the region.
In addition to all this, the Prime Minister’s Office has also directed the Ministries to negotiate the price for sourcing gas for the urea plant on long term basis.
India normally relies on naphtha-based urea which is quite costly, therefore the setting up of a gas-based urea plant holds additional significance as comparably it is more cost-effective.
Also India is gradually making efforts to move towards using gas-based urea from the traditionally used naphtha-based urea throughout the country. Out of India’s total urea requirement, around 20 per cent to 30 per cent is through imports, and till February 15, 2013, Government had imported 1.6 million tonnes of urea from Iran.
The decision was taken during a meeting conducted by Principal Secretary in the PMO Pulok Chaterji with officials of both Petroleum and Fertiliser Ministries recently to review oil and gas supplies from Iran.
Chabahar, which is also a site of a major port by the same name in Iran, is situated quite near the Iran-Pakistan border and is also not far away from Pakistan’s Gwadar port, which incidentally was recently taken over by China.
Sources informed that the PMO’s decision to set up the urea plant in Chabahar would be in addition to another proposed move by the Government of providing financial assistance to Tehran for developing Chabahar port. Both these decisions are, they added, seem designed towards countering China’s rather ambitious moves in the region.
In fact sources told The Pioneer that New Delhi has been stepping up its efforts in Persian Gulf and Africa by putting in investments in various infrastructure and other developmental projects with a view to challenge Beijing’s growing influence in these regions.