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India is still hopeful it can participate in the Farzad B natural gas field development in the Persian Gulf after Iran decided to go ahead with the project without foreign participation, oil ministry officials told S&P Global Platts on May 23.
With US and Iran talks progressing to end sanctions against the Middle East country, some Indian refiners also told Platts they are looking forward to resuming crude trade with Iran.
“Any positive development on Iran would reduce crude price and help consuming countries like India,” M.K. Surana, chairman and managing director of Hindustan Petroleum Corp. Ltd (HPCL). India’s No 3 state-run refiner, told Platts. Oil prices are unlikely to go much beyond $70/b for long.
“Any price beyond $70/b would be a temporary phenomenon,” Surana said.
Other refineries in India, the world’s third-largest crude importer, also said they would resume imports as Iran’s crude grades suit Indian refineries.
An official from India’s No. 1 refiner Indian Oil Corp. declined to comment as to when India would resume crude imports from Iran after a gap of more than two years.
India stopped procuring supplies from India after former President Donald Trump withdrew the US from the nuclear deal in 2018 and re-imposed sanctions, which have severely constrained Iran’s oil production and exports. Iran pumped 2.43 million b/d of crude in April, according to the latest Platts survey of OPEC output, down from its pre-sanctions production of between 3.8 million-3.9 million b/d.
Iran’s heavy sour grades compete directly with crudes such as Saudi Arabia’s Arab Heavy, Arab Light and Arab Medium; Iraq’s Basrah Light, Basrah Medium and Basrah Heavy; Russia’s Urals; the UAE’s Upper Zakum; Oman Crude Blend; Kuwait Export Crude; Venezuela’s Mesa 30 and Merey 16; and Mexico’s Mata, among others.
Iran also produces and exports ultra-sweet low sulfur oil or condensates, especially from South Pars, which is similar to condensates produced by Norway, Qatar, the US and Australia.
Gas award
Last week, India lost the OVL-developed Farzad-B gas field after Iran awarded a $1.78 billion contract to develop the giant gas field to a local company.
In 2020, Iranian oil ministry officials said any foreign participation was unlikely because of US sanctions that have all but eliminated outsiders from working on Iran’s energy projects.
India may join the project in later stages of growth, Indian oil ministry officials told Platts.
In 2008, an ONGC Videsh-led consortium discovered Farzad B gas within the Farsi offshore gas block along with Oil India and Indian Oil.
In 2016, Iran said it was examining the Indian proposal but that an agreement was unlikely because of the difference between Iran’s demanded gas price and India’s offer.
Farzad B’s gas in place is around 23 Tcf. India offered a $6.2 billion development plan and a gas price of around $4/MMBtu for Farzad B in 2018.
