After Collapse of Chabahar Rail Deal, Iran May Deny Gas Field Rights to Indian Company

New Delhi (Sputnik): Iran broke a 2016 deal with India for building the 628-kilometre Chabahar-Zahedan rail project last week, citing delays. The rail-link was a key component of India’s plan to boost trade with Afghanistan, bypassing Pakistan. Tehran has now decided to connect the port of Chabahar with the Afghan border on its own.

Close on the heels of breaking the Chabahar-Zahedan rail project agreement, Iran appears set to deny India’s state-run ONGC Videsh Limited (OVL), exploration and production rights for the key Farzad B gas field.

The granting of rights to OVL was already delayed with New Delhi moving slowly on the issue, but came to a complete standstill after the 2018 imposition of US sanctions on Tehran. Media reports indicate that Iran may now offer the exploration rights to a local entity or to a company from another country.

Reports quoting the Iranian oil ministry said that Tehran might not offer the Indian company the opportunity to develop the gas field, but the decision has not been officially communicated.

New Delhi, however, said Iran was planning to develop the field on its own and would involve India “appropriately at a later stage”.

“There have also been some reports regarding the Farzad-B Gas field negotiations in which ONGC was involved in the discovery stage. Follow-up bilateral cooperation was however impacted by policy changes on the Iranian side. In January 2020, we were informed that in the immediate future, Iran would develop the field on its own and would like to involve India appropriately at a later stage. This matter remains under discussion,” said a spokesperson for India’s External Affairs Ministry on Thursday.

Regarding the cancellation of the Chabahar-Zahedan rail project, the spokesperson said both the countries had reviewed it in detail in December 2019 and the “Iranian side was to nominate an authorised entity to finalise outstanding technical and financial issues. This is still awaited.”

The Farsi-B was discovered by OVL about 10 years ago and both the countries were targeting to conclude a deal for its development by 2016, but mutually agreed to postpone the deadline by a year. The deal was then stuck over the pricing of gas but this was then delayed again by the reimposition of US sanctions on Iran in 2018.

The cancellations come at a time when China and Iran are on course to finalise a comprehensive 25-year strategic partnership based on an agreement signed during the visit of Chinese President Xi Jinping to Tehran in 2016.  Tehran expects the pact to build economic ties worth up to $600 billion over the next 10 years.

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