It was a senior official at Research and Analysis Wing (RAW), India's external intelligence agency who first conveyed the news. The deal
India was hoping for had indeed been struck between Iran and the major world powers, by which the former had agreed to curb its nuclear programme in exchange for limited relief from the sanctions imposed on it. South Block mandarins who had been closely following the negotiations between Iran and the US, France, Germany, UK, China and Russia, were delighted.
That is because the breakthrough deal of November 24 has wide ramifications for India
. The country is Iran's second-largest oil buyer after China but had to sharply cut back on purchases following the sanctions. India also owes Iran some $5.3 billion for oil purchases - the sanctions have not permitted Iran to repatriate cash earned from oil exports since February.
While sanctions still remain on Iran's crude sales, the deal, significantly, suspends sanctions provisions on insurance. This had left refiners who processed Iranian oil without cover and consequently forced India to lower its imports to below even the level permitted after the sanctions. The lifting of the European Union restrictions on insurance opens the door for Indian refiners to increase imports to contract levels without breaching sanctions.
India imported roughly 18 million tonnes (MT) crude from Iran in 2011/12. It fell to 13 MT in 2012/13. This year India had imported just 3.5 MT crude from Iran till October-end.
Iranian crude is cheaper than that from most other countries, as Tehran offers discounts of $2 to $5 per barrel. The international prices of petroleum products have also softened with the partial lifting of curbs on Tehran. This could help to bring down India's fiscal deficit as well, as it would reduce the under-recoveries of oil marketing companies.
Cheaper crude imports would also ease pressure on India's current account
and support the rupee. In a report, Citigroup said Iranian nuclear deal could be a "get-out-of-jail-free card" for current account deficit countries, such as India, Indonesia and Turkey.
However, India will not restart its oil and gas exploration programme in Iran's Farzad B gas field. State-owned Indian companies ONGC Videsh Ltd (OVL), Indian Oil and Oil India had formed a consortium and won the rights to explore the gas field, but India did not apply to renew the service contract because of the UN sanctions. "Now we will watch how things pan out in Iran in the next six months," an official from one of the partner companies said.
Officials in the petroleum ministry and the foreign office told BT they were looking at ways to clear the payments owed to Iran for oil imports. "We are expecting that the route of Turkey's Halkbank will open," says an officer from the foreign office. The route was blocked in February 2012.
Earlier India was paying in euros through this bank. Petroleum Secretary Vivek Rae also confirmed that India would be sending a delegation to Iran to discuss payment modes.