Shirish Nadkarni
OGJ Correspondent
MUMBAI, May8 -- Iraq has invited India's largest refiner, Indian Oil Corp. (IOC), to establish refineries in war-torn Iraq and to participate in other downstream projects.
Indian Petroleum Minister Murli Deora and Iraqi Oil Minister Hussain Al-Shahristani met recently to exchange views on a host of such mutually beneficial projects.
Discussions revolved around the participation of two Indian state-owned enterprises in Iraq's oil and gas sector—refiner IOC in downstream projects, and explorer-producer ONGC Videsh Ltd. (OVL) in Iraq's upstream sector. OVL and Reliance Industries both have expressed interest in entering Iraq's oil exploration sector.
OVL, Reliance, and Algeria's Sonatrach had been in talks with the Saddam Hussein regime before UN forces assumed control over Iraq in 2000. The talks were interrupted by UN sanctions after 2000.
Iraq has proved oil reserves of 112 billion bbl, which makes it the world's second largest oil nation behind Saudi Arabia.
Pipeline plan revived
Deora also met Iranian Oil Minister Sayed Kazem Vaziri Hamaneh and Pakistani Petroleum Minister Amanullah Khan Jadoon to discuss the 10-year-old Iran-Pakistan-India (IPI) gas pipeline project.
The $7 billion pipeline has come under US scrutiny, with the US asking both India and Pakistan not to go ahead with the pipeline, alleging that Iran was developing nuclear weapons.
Deora also discussed the LNG import contract with the Iranian minister. In June 2005, India had signed a sale-purchase agreement with Tehran for importing 5 million tonnes/year of LNG by yearend 2009.
The contract, between National Iranian Gas Export Co. and a consortium of GAIL, IOC, and Bharat Petroleum Corp. Ltd., has not yet been approved by Iran's Supreme Economic Council.
Under the 2005 contract, India was to buy LNG at $3.25/million btu. Iran is now demanding more for the LNG after global oil prices rose to a high of $75/bbl in 2006. The price of LNG is linked to oil prices.
Deora said in January that India was willing to pay a higher price for extra LNG quantities from Iran if it honored the existing 5 million tonnes/year contract. The contract allows India the option of buying an additional 2.5 million tonnes/year over the contracted amount at the same price.
