In a big knock to our international standing, India has just lost its stake in Iran’s Farzad-B gas field in the Persian Gulf. For years, ONGC Videsh Ltd (OVL) has been working on the project and invested over $400 million in prospecting the gas field. However, when it came to commercially developing the gas find, the National Iranian Oil Company dumped ONGC and preferred to sign a $1.8 billion contract with local company, Petropars. The OVL consortium began work on the Farzad-B block in 2002 and discovered the massive 23 trillion-cubic-feet gas field in 2008. However, its $11 billion development plan dragged on and came unstuck after US sanctions in 2018 did not allow technical studies to be conducted.
Something similar happened to developing Iran’s 620-kilometre $2 billion railroad connecting Chabahar Port to Zahedan in Afghanistan. While the Chabahar port moved ahead, the railroad languished. Finally, after complaints and threats, Iran dumped India last year and decided to go ahead on its own. Not only did we lose a possible $400 million contract for rolling stock and locomotives, we also squandered a logistical opportunity. The Chabahar rail link would have given India direct trade connectivity with Afghanistan, bypassing Pakistan.
While there may be differences between India and Iran on commercials, a deeper dive will show that India has not been able to stand up to the pressures of the US-Saudi Arabia axis over isolating Iran. Suspicions have mounted since 2019 when Indian Oil failed to renew its term contract for the import of Iran crude. Not only did we lose a cheaper alternative to Saudi oil, we also missed out on lower freight charges and softer payment terms. For the Chabahar Port and railroad, though the US allowed a ‘carve-out’ to its boycott-Iran policy, it appears India went slow on the latter. Trump’s 2018 sanctions have also taken a toll on the Farzad-B gas field project. It has been repeatedly proven that India’s domestic interests are best served if it remains non-aligned in international superpower disputes. Unfortunately, the lesson has not been learnt and we have suffered commercially once again.