After Russia, Iran Offers Oil To India

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What has happened?

Iran has offered to meet India’s energy demand at a time when global crude oil prices are at multi-year highs,
Threatening to push inflation, widening trade deficits that New Delhi runs with foreign countries and weakening the rupee against the dollar.

Iranian ambassador to India Ali Chegeni has offered to relaunch the rupee-rial trade mechanism for the export oil & gas to India.
He added that bilateral trade has the potential to cross $30 billion if the two sides can revive the rupee-rial trade.
Prior to US sanctions, Iran and India ran a barter system wherein Indian oil companies would pay in rupees to local Iranian banks, Which in turn used the currency to pay for imports from India.
The public sector bank, UCO Bank, was practically forced to be the bank for settling deals with Iran.
The UCO Bank set up a rupee account for Iranian government from which India’s exporters were paid rather than getting paid directly from Iran in their currency.
The mechanism led to a proliferation of oil trade between the two countries to the extent that Iran replaced Saudi Arabia as India’s largest oil supplier.

Iran was India’s second-largest oil supplier but New Delhi had to halt imports after Donald Trump’s United States backed out of the nuclear deal with Tehran and re-imposed sanctions on Iranian oil.
After American sanctions, trade between India and Tehran plunged from $17 billion in FY19, to less than $2 billion in April-January of the current fiscal.

The ambassador further said “a rupee-rial trade mechanism can help companies from both the countries deal with each other directly and avoid third-party intermediation costs.”

The ambassador also proposed to find alternatives ways to revive the Iran-Pakistan-India pipeline project for transporting natural gas to India.
The trade between Iran and New Delhi wasn’t just restricted to oil & gas. Urea, petrochemicals, organic fruits, agro commodities, pharmaceuticals, iron & steel and automobiles, clinkers, cement also form part of bilateral trade.
Iran even introduced a paper-less, electronic multiple visa issuance system for Indians to promote exchange of businessmen, tourists and students, the envoy added.
According to Chegeni, two-way trade between India and Iran, which had exceeded $17 billion in 2018-19, had the potential to reach $30-35 billion by this fiscal had the oil imports not been stopped by India.

The development of the Farzad B gas field, negotiations for which had been going on for over a decade, is another part of the bilateral ties that has suffered a setback.
In 2008, ONGC Videsh Ltd (OVL), the Indian public sector oil and gas corporation, had discovered the gigantic gas field spread across the maritime boundary of Iran and Saudi Arabia in the Persian Gulf.

In February 2018, on then-Iranian President Hassan Rouhani’s
visit to India, New Delhi and Tehran had decided to move beyond the traditional buyer-seller relationship in their energy partnership, and expediting negotiations on Farzad B.
But in May this year, Iran decided to go ahead with the project on its own, without India’s cooperation, giving the contract to a local company.
However, according to Ambassador Chegeni, “the door is still open for India for Farzad B”.

India’s recent decision to import Russian oil at the peak of Western sanctions has invited condemnation,
While Europe continues to buy Russian natural gas with no timeline in sight for cutbacks.
India’s largest oil refiner and oil marketing company IndianOil signed a contract for 3 million barrels of Russian crude and the second largest BPCL booked 2 million barrels at heavily discounted rates.
Media reports said Russia is offering up to 25% discount to India.
India is highly dependent on imports for meeting its energy requirements as nearly 85 per cent of its crude oil requirement has to be imported.

Q) During Ancient times, Qanat was constructed in Iran. What is it?