Iran retaliates to Indian oil cut plans

[BHarwana]

Iran, India's third biggest oil supplier, used to give a 90-day credit period to refiners like Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) to pay for the oil they would buy from it.

Iran has cut by one-third the time it gives to Indian refiners to pay for oil they buy from it and has also raised ship freight rates as a retaliatory measure to New Delhi's decision to reduce Iranian oil imports.

Iran, India's third biggest oil supplier, used to give a 90-day credit period to refiners like Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) to pay for the oil they would buy from it.

Now, Tehran has reduced this to 60 days, essentially means that IOC and MRPL would have to pay for the oil they buy from Iran in 60 days instead of previous liberal term of 90 days, sources privy to the development said.

Iran oil sale terms were the most attractive for Indian refiners. Besides a liberal credit period, it also shipped the oil to India for a nominal 20 per cent of normal ocean freight.

Other Middle-East sellers offer not more than 15-day credit period.

Sources said National Iranian Oil Co (NIOC) has also decided to cut the discount it offers to Indian buyers on freight from 80 percent to about 60 per cent.

IOC and MRPL -- largest state buyers of Iranian crude -- will cut imports from Tehran to 4 million tonnes in 2017-18 from 5 million tonnes in the previous year.

Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) will cut oil imports from Iran by 0.5 million tonnes each to 1.5 million tonnes as New Delhi built pressure on Tehran to award the Farzad-B field to its discoverer, ONGC Videsh Ltd.

Iran has deterred in awarding rights to develop the 12.5 trillion cubic feet discovery OVL had made 10 years back and now New Delhi is using its oil imports as a bargaining tool to get Tehran to agree.

Earlier this week, Iranian Oil Minister Bijan Zangeneh had dismissed the threat of cutting imports, saying, "We cannot enter deals under threats."

"Using language of threats is not appropriate," Zangeneh was quoted as saying by Iranian news agency Irna. "There are a lot of customers for Iranian oil and their demand surpasses our export capacity."

India is Iran's second biggest oil buyer after China and was among a few which had continued to import crude despite Western sanctions against Tehran.

Since lifting of the sanctions last year, Iran is playing hardballs over award of rights to develop Farzad-B gas field in the Persian Gulf to OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC).

OVL has submitted a revised master development plan of over USD 5 billion for developing the field.

The new plan, filed with Iranian Offshore Oil Company (IOOC), excludes liquefaction facilities to turn the gas into LNG for ease of shipping to nations like India, sources said.

The two nations were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017.

Now, the deal is being targeted to be wrapped up by September after the two sides agree on a price and a rate of return for OVL's investments.

Farzad-B was discovered by OVL in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India and IOC, over USD 80 million.

Iran was initially unhappy with the USD 10 billion plan submitted by OVL for development of the 12.5 trillion cubic feet (tcf) reserves in Farzad-B field and an accompanying plant to liquefy the gas for transportation in ships.

It felt the USD 5 billion cost OVL and its partners have put for developing the field was on the higher side and wanted it to be reduced. OVL will earn a fixed rate of return and get to recover all the investment it has made in the field development.

The field in the Farsi block was discovered by the OVL- led consortium in 2008. It has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf is recoverable.

http://www.moneycontrol.com/news/bu...taliates-to-indian-oil-cut-plans-2254605.html

 

[Chinese-Dragon]

Earlier this week, Iranian Oil Minister Bijan Zangeneh had dismissed the threat of cutting imports, saying, "We cannot enter deals under threats."

Looks like the honeymoon is over.

Iran and India are also accusing each other of deliberately stalling the Chabahar Port project:

Iran, India trade charges on delay of Chabahar port - Economic Times

NEW DELHI: The Budget may have allotted Rs 150 crore for the development of Chabahar port in Iran, but it may not be enough to bring the long delayed project back to life as Tehran has not yet submitted a proposal for release of the fund despite several reminders, some officials say.

Indian government had set aside $235 million, or about Rs 150 crore, line of credit for the project since 2015 but is unable to release the first tranche of $150 million, they said.

"The funds cannot be released without paperwork and this has not yet reached the Indian government. Even reminders from EXIM Bank to Iran have not helped," a person familiar with the matter told ET.

"There are apparently no reasons behind Iran's delay in submitting the proposal for the release of loan," the person alleged.

Iranian government sources, however, told ET that the Indian side is delaying work on the project, but did not explain reasons for delay. The project was earlier delayed when the Iranian side unilaterally changed terms and conditions on the eve of the signing of MoU in 2015 by introducing a local stakeholder without consulting India, Indian sources said.

 

[Sully3]

Looks like the honeymoon is over.

Iran and India are also accusing each other of deliberately stalling the Chabahar Port project:

Iran, India trade charges on delay of Chabahar port - Economic Times

NEW DELHI: The Budget may have allotted Rs 150 crore for the development of Chabahar port in Iran, but it may not be enough to bring the long delayed project back to life as Tehran has not yet submitted a proposal for release of the fund despite several reminders, some officials say.

Indian government had set aside $235 million, or about Rs 150 crore, line of credit for the project since 2015 but is unable to release the first tranche of $150 million, they said.

"The funds cannot be released without paperwork and this has not yet reached the Indian government. Even reminders from EXIM Bank to Iran have not helped," a person familiar with the matter told ET.

"There are apparently no reasons behind Iran's delay in submitting the proposal for the release of loan," the person alleged.

Iranian government sources, however, told ET that the Indian side is delaying work on the project, but did not explain reasons for delay. The project was earlier delayed when the Iranian side unilaterally changed terms and conditions on the eve of the signing of MoU in 2015 by introducing a local stakeholder without consulting India, Indian sources said.

Iran found out India doesn't really have the money it portrays it has.

Anything that India offers Iran China and Pakistan together can dwarf it

 

[BHarwana]

Looks like the honeymoon is over.

The honey moon was over long time ago the divorce is just getting public. The Honey moon was because of Russia but India in USA arms making Iran treating India like an EX-Girlfriend.

 

[Max]

a normal case of cutie become kutti.

 

[Taimoor Khan]

Indians are now realizing how it is like to balance the diplomacy between Persians and the GCC.

 

[BHarwana]

a normal case of cutie become kutti.

Hahahahahaha you really made me laugh like hell

 

[unbiasedopinion]

Normal business tactics to extract the maximum from others. The only thing is in India, things do come in public domain quite quickly. Anyways, like earlier Uranium deals with other countries and the fifth generation fighter deal, this will be sorted out. This is just bargaining chip.

 

[Indian wonk]

There is nothing wrong with India Iran relationship. It is just plain economics




Here's why India decided to cut Iranian oil purchases in row over gas field

The context to the apparently sudden dispute between India and Iran on oil has much more to do with expected trend in pricing of crude and less to do with the delay on the terms of Farzad B gas field.

Indian policy makers feel they can slowly take on more risks in buying of crude from spot markets than stick to long term contracts.

India has always played with a safety first approach to the purchase of its crude from abroad which accounts for 80% of its domestic requirement. The approach is a follow though from the impact of the successive oil shocks of the seventies and the periodic forex crisis, which has occurred even as late as 2013, all of which have left their scars on the economy.

So the petroleum and natural gas ministry prefers to deal with the oil exporters to set a price band known as the official selling price (OSP). These bands are used to sign a long term contract, usually of one year where India is assured of the contracted supply at a price that hovers around the OSP. It is a hedge against the day when crude prices would zoom upwards. As a measure of further safety even within the set prices, India diversifies the list of countries from whom it shops for oil. Saudi Arabia accounts for 18% of the total imports, while Iran accounts for 6% (it used to be higher before the sanctions) Venezuela accounts for 12% and even countries like Angola account for 4% of India’s crude import. The ratio of long term to spot purchase for India at any given period is roughly 80:20.

From early 2014, as prices of oil has dipped globally, the expected bad day when prices would shoot past $100 a barrel has not happened even once for India. Instead as the analysis of IEA or BP shows, there is very little reason to believe it would happen in future too.

These trends give India the confidence to depend on the spot markets a wee bit more and diversify the market even more. India wants to buy more from the African oil producers—it also makes sense as India pushes up investment in their upstream and downstream projects. Other than Angola the shopping list includes Algeria, Gabon, Equatorial Guinea, Cameroon and the Republic of Congo. It would cut the share of the existing sellers, especially for the heavy crude that Iran has more of and is thus more keen to sell. The market for this variety is limited—India itself has only two refineries that processes this crude, the RIL refineries at Jamnagar and state-owned Mangalore Refineries (MRPL). It is a bit of a buyers’ market here, as the bulk competitors for this type of crude are only China and Japan in Asia.

The decline that has set in the price of crude also now appears to be long term trend. Any spike is expected to come up against the world of shale oil. Prices are not expected to shoot up in this top heavy environment. To test the waters IOC had for some time raised its spot component to 30%. It has not come to grief. The lower price helps to keep the prices at the petrol bunks low back home—a huge political dividend for any Indian government. There is enough temptation for India to bargain with its buying power in the global oil markets now.

http://www.business-standard.com/ar...ses-in-row-over-gas-field-117040501125_1.html



So before people start jumping around why India is actually reducing oil purchases from Iran.


1) Indian policy makers feel they can slowly take on more risks in buying of crude from spot markets than stick to long term contracts.

India has always played with a safety first approach to the purchase of its crude from abroad which accounts for 80% of its domestic requirement. The approach is a follow though from the impact of the successive oil shocks of the seventies and the periodic forex crisis, which has occurred even as late as 2013, all of which have left their scars on the economy.

2)India diversifies the list of countries from whom it shops for oil. Saudi Arabia accounts for 18% of the total imports, while Iran accounts for 6% (it used to be higher before the sanctions) Venezuela accounts for 12% and even countries like Angola account for 4% of India’s crude import. The ratio of long term to spot purchase for India at any given period is roughly 80:20.


3)These trends give India the confidence to depend on the spot markets a wee bit more and diversify the market even more. India wants to buy more from the African oil producers—it also makes sense as India pushes up investment in their upstream and downstream projects. Other than Angola the shopping list includes Algeria, Gabon, Equatorial Guinea, Cameroon and the Republic of Congo. It would cut the share of the existing sellers, especially for the heavy crude that Iran has more of and is thus more keen to sell.

 

[SS Totenkopf]

Good to see India is adopting hardline trade policy with Iran
While state refiners have cut imports by 20%, another Indian company has doubled imports from Iran last month.

India's Essar doubles Iran oil imports in Feb vs Jan - trade
Reuters | Mar 31, 2017, 05.10PM IST

Just last week India announced $ 3 billion investment in Iran at thevsane time as announcing import cuts:

Looks like the honeymoon is over.

Iran and India are also accusing each other of deliberately stalling the Chabahar Port project:

Epic Fail.
Two month old report.

This is the latest from 2-3 days back:

India's ONGC Videsh to Spend Over $3 Billion on Iran Gas Block
by
Bloomberg
4 April 2017, 15:27 GMT+5:30
The overseas arm of India’s biggest oil and gas explorer intends to spend more than $3 billion on Iran’s Farzad-B natural gas block.

ONGC last month submitted a revised plan to the Iranian government for the block, which the company will be able to develop within five years, Managing Director N.K. Verma told reporters in Mumbai on Tuesday. The Indian oil company is now waiting for feedback from Tehran, Verma said.

 

[BHarwana]

Every thing is going wrong with India Iran relations. India had based it's economic growth on Irani energy getting it cheap but now come the competition from Pakistan and China and I can already see Indian growth rate declining.

 

[Chinese-Dragon]

Good to see India is adopting a carrot stock policy with Iran
While state refiners have cut imports by 20%, another Indian company has doubled imports from Iran last month.

India's Essar doubles Iran oil imports in Feb vs Jan - trade
Reuters | Mar 31, 2017, 05.10PM IST

Just last week India announced $ 3 billion investment in Iran at thevsane time as announcing import cuts:



Epic Fail.
Two month old report.

This is the latest from 2-3 days back:

India's ONGC Videsh to Spend Over $3 Billion on Iran Gas Block
by
Bloomberg
4 April 2017, 15:27 GMT+5:30
The overseas arm of India’s biggest oil and gas explorer intends to spend more than $3 billion on Iran’s Farzad-B natural gas block.

ONGC last month submitted a revised plan to the Iranian government for the block, which the company will be able to develop within five years, Managing Director N.K. Verma told reporters in Mumbai on Tuesday. The Indian oil company is now waiting for feedback from Tehran, Verma said.

Didn't you see the latest report from PressTV?

Iran's petroleum minister rejects India threats to cut oil imports - PressTV

That is directly from the Iranian government itself.

 

[SS Totenkopf]

Didn't you see the latest report from PressTV?


That is directly from the Iranian government itself.

Obviously Iranian govt will try to downplay the impact of the cuts.

 

[Indian wonk]

Every thing is going wrong with India Iran relations. India had based it's economic growth on Irani energy getting it cheap but now come the competition from Pakistan and China and I can already see Indian growth rate declining.

Nothing is going wrong with India Iran relationship. And Pakistan is no match for India's energy hunger

India - 4000000 barrels / day
Pakistan 450000 barrels/ day

Basically India is 9 times of Pakistan LoLzzzzzzzzzzzzzzzzzzzz

60 days is enough when we are getting 15 days from other oil suppliers of India .
Still Thank you Iran .

 

[BHarwana]

This is the latest report and Iran has decided to ditch the ungly girl friend.

India says Iran already 'retaliated' against its oil import cut plan
Fri Apr 7, 2017 11:15AM

Indian media say Iran has cut by one-third the time it gives to Indian refiners to pay for oil they buy from it and has also raised ship freight rates.

Indian media say Iran has cut by one-third the time it gives to Indian refiners to pay for oil they buy from it and has also raised ship freight rates.

The Hindu in a report quoted informed sources in New Delhi as saying that Iran had designed both measures in retaliation against India’s decision to reduce Iranian oil imports.

Iran, India’s third biggest oil supplier, used to give a 90-day credit period to refiners like Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) to pay for the oil they would buy from it, added the report.

Now, Tehran has reduced this to 60 days, essentially means that IOC and MRPL would have to pay for the oil they buy from Iran in 60 days instead of previous liberal term of 90 days, sources privy to the development said.

The Hindu quoted unidentified sources as saying that the National Iranian Oil Company (NIOC) had also decided to cut the discount it offers to Indian buyers on freight from 80 percent to about 60 percent. Iran is yet to react to what has been described by the Indian media as retaliatory measures.

Reports emerged in the media last week that several leading Indian refiners were planning to cut oil imports from by a fifth.

The Times of India quoted sources as saying that the move came as New Delhi took “a more assertive stance over an impasse on a giant gas field (Farzad B) that it wants awarded to an Indian consortium”.

However, Iran’s Minister of Petroleum Bijan Zanganeh said Tehran was not worried about India’s purported plan to cut oil imports.

He emphasized that the Islamic Republic was open to negotiations with the Indian side to boost cooperation but stressed that Tehran would not accept what he described as “the language of threat”.

“There should be sensible conditions in the negotiations. We cannot sign a contract under threats. The language of threat is not a good one,” Zanganeh said.

“India is one of our good customers and we are willing to boost cooperation. If there is a cut in our exports to India, we will have no troubles as there are many other customers,” he emphasized

http://www.presstv.ir/Detail/2017/0...Iran-retaliated-against-oil-import-cut-plan--