India and Iran have made progress with regards to helping each other’s oil industry, which could drastically improve their respective economies. In a recent agreement between the two countries, Iran has offered to increase the freight discount for crude sales to India, after New Delhi has agreed to help boost imports.
Iran’s recent decision was done in a bid to retain frequent buyers of its product in Asia, Reuters reports. In 2016, following the lifting of the economic sanctions on Iran, India was given an 80 percent discount on freight imports, but it was reduced to 62 percent for the 2017-18 fiscal year.
With the new agreement between the two oil ministries, India will be entitled to a 100 percent discount, and this could drastically boost sales on Iran’s part.
Just a day before the agreement, India announced that it is looking to further expand its oil industry by seeking for a stake at the South Azadegan oil field near the Iraqi border, and some Indian companies are specifically eyeing a claim at the Iranian crude field.
A stake in the South Azgedan oil field
The Economic Times reports that Indian oil minister Dharmendra Pradhan is looking to help out companies seeking a stake in the Iranian field. The announcement was made alongside the Iranian oil minister, Bijan Zanganeh, during a recent conference in New Delhi.
Adding to their intentions to claim a stake, Pradhan added that the companies in India are going to increase their purchases of the commodity in Iran from this year until the next.
As compensation for India’s stake, Zanganeh adds that by April, his country will continue exporting up to 2.2 million barrels of oil per day. He further stated that they are planning to sell around 500,000 barrels per day to India in the upcoming fiscal year. When it comes to buyers, privately and state-owned refineries in India are already in line for the oil.
For now, Iran’s crude ministry is yet to agree with India’s request. However, it is open to showing the Indian firms a few data on other fields by next week.
The latest development between the two countries will provide each with economic growth, and it comes just in time as India’s energy businesses have begun looking for oil resources beyond their borders.
India shows interest in oil again
A week ago, Indian Prime Minister Narendra Modi announced that a $600 million investment has been made for an off-shore Abu Dhabi oil concession. According to Forbes, it will most likely give investors 10 percent of the oil from the concession.
Just a year ago, the ministry in charge of energy in India had plans to sell only electric cars in the country by 2030. However, with the investments and the agreements with Iran, it seems likely that the original plan has to wait now that the country has shifted its attention to crude once again.
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