Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

New Tehran regime scraps oil, gas concessions to India

Sep 18 2013, 01:48 IST
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SummaryThe new government in Iran has withdrawn all crucial oil and gas concessions that had been promised to India by its predecessor.

The new government in Iran has withdrawn all crucial oil and gas concessions that had been promised to India by its predecessor.

Oil minister Bijan N Zangeneh, it is learnt, told Indian ambassador D P Srivastava on September 1 that Tehran would not accept the entire payment for crude oil imported by India in rupees as agreed in July.

India was banking on 100 per cent rupee payment for Iranian crude to cut its forex outflow. Petroleum Minister M Veerappa Moily had assured Prime Minister Manmohan Singh last month that an additional 11 million tonnes would be imported from Iran in 2013-14 to save $8.47 billion.

Iran has since stopped issuing invoices in rupees for the full quantity of crude and reverted to the old system of accepting only 45 per cent of the payment in rupees.

Zangeneh, it is learnt, told Srivastava that the new Central Bank of Iran governor had complained of difficulties in transferring money in euros from India to other countries to pay for food and medicines.

Iran, he said, needed help in resolving the problem with getting 55 per cent payment in euros, which was being routed through Turkey’s Halkbank, and ended in February. Zangeneh wants India to renegotiate the terms and revert to majority euro payment.

Zangeneh also told the Indian envoy that the previous regime’s offer to sign a production sharing contract (PSC) for the Farzad B offshore gas field was “not

acceptable”, as he could convince neither the government nor parliament to approve the PSC.

Under PSC, an operator gets a share of production or revenue in proportion to its investment. In a service contract, the Indian consortium would get a flat 15 per cent return on the investment for developing the field.

India had started work on floating a new government company to develop the field and keep out the existing contractor consortium of ONGC Videsh Ltd, Indian Oil Corp and Oil India Ltd to shield them from US sanctions.

The new regime has

also reversed the offer of natural gas at a heavily discounted price of 84 cents per million BTUs for setting up a urea plant through Indian investment at Assaluyeh or Chahbahar.

Zangeneh now wants a product-linked gas price where Iran would calculate the price related to the international price of urea after taking into account investment, operation cost and expected returns.

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