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India is wagging its finger at Iran for delaying the license decision on a major gas field. Asia’s second-biggest oil market will reduce the amount of crude that it imports from Iran by 20 percent in financial 2017/18, media reported, quoting sources from the Indian oil sector.
The field in question, Farzad B, is estimated to contain over 350 billion cu m of natural gas, with its productive life seen at 30 years. Indian giant ONGC has submitted a $3-billion bid for the development of Farzad B, but Tehran is taking its time, waiting for rival—and potentially better—offers.
As a result, New Delhi has instructed local refiners to shrink the input from Iran to 190,000 barrels daily from 240,000 bpd – close to half of the total daily import rate for Iranian crude for the period from April 2016 to this February. In fact, Iran managed to get to the #3 spot among the top crude oil exporters to India, after Iraq and Saudi Arabia.
Tehran, however, appears to be unfazed. Evidently bolder now that it is once again on the global market and can choose among bidders for its oil and gas fields, the Iranian state oil company has struck back by threatening to reduce the massive discount it offers Indian importers, from 80 percent to 60 percent.
Iranian media recall that India was one of few countries that remained trade partners to Iran during the sanction years, supplying the country with a variety of otherwise inaccessible goods. Now that Iran’s fortunes have changed, it made clear its intention to expand its oil and gas industry as quickly as possible, apparently at the best possible price as well.
For Indian refiners, the Hindu notes, it is a bit risky at this moment, while OPEC shrinks production in a bid to stimulate prices. With Iran cutting the discount, they might find it difficult to find economical alternatives to the supplies from Tehran.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.