Union Petroleum minister Dharmendra Pradhan has found a reason to be optimistic with Iran clinching a historic nuclear deal with the six major countries, including the US. With global crude prices falling post the Vienna deal, Pradhan is hopeful that imminent lifting of sanctions against Iran will further benefit India.
“With Iran coming to market, the assumption is that there will be further slide in oil prices…India will be one of the beneficiaries of sliding oil prices,” Dharmendra Pradhan said.
India is the world’s fourth largest oil consumer and also the second biggest buyer of Iranian oil after China, importing about 11 million tonnes of crude oil in 2014-15. However, Pradhan remained non-committal on whether India will increase imports from Iran after restricting it at 11 million tonnes in the past two fiscal.
“Let’s see. It (increasing imports) depends on a lot of commercial considerations,” Pradhan said.
“But one thing is sure, oil prices (in international market) will be reasonable. I believe prices will be reasonable and responsible,” the Union Petroleum minister added while speaking at an event in New Delhi.
Indian firms have so far shied away from investing in Iran essentially due to impasse between Iran, US & Europe. The same has been deterring New Delhi from claiming rights to invest nearly USD 7 billion in the biggest gas discovery ever made by an Indian firm abroad.
Pradhan also opined that with Iran re-joining OPEC, there is likely to be a “reduction in production” by the oil cartel. “With Iran’s participation, there will be two very important things happening. First, viability of E&P fields will be a challenge. Secondly, there is a tentative prediction of further slide in oil prices,” he said.
As per the deal, sanctions imposed by the US, European Union and United Nations will be lifted in return for Iran agreeing long-term curbs on a nuclear program that the West suspected was aimed at creating a nuclear bomb. The sanctions, however, will remain in place at least until United Nations is satisfied with Iran’s compliance with the deal. The UN is expected to give its findings on the same in December 2015. Also the deal has to be ratified by the US Congress within 60 days.
But the latter may not be a major challenge with US President Barack Obama hailing the landmark nuclear deal with Iran. Barack Obama said the pact was based on verification and not on trust while also stressing that he will veto any legislation aimed at scuttling the agreement.
“After two years of negotiations, the United States, together with our international partners, has achieved something that decades of animosity has not: a comprehensive long-term deal with Iran that will prevent it from obtaining a nuclear weapon,” Obama told the press at the White House on Tuesday.
(With inputs from the PTI)