Iran gas deadline puts more pressure on India to defy US sanctions

May 13, 2017

By Jason Overdorf

Iran gave Indian firms a deadline of a month to sign a contract to develop a gas field discovered in the Persian Gulf, in a move that appears to be intended to extort further Indian support against U.S. economic sanctions.

The move comes a day after U.S. President Barack Obama tightened sanctions on Iran's central bank, arguing that various players had managed to circumvent the measures imposed at the end of 2011.

“Previously, U.S. banks were required to reject, rather than block and freeze, Iranian transactions,” Reuters reported. “Obama's executive order requires American institutions to seize Iranian state assets they encounter instead of just turning them back.”

As I reported last week for GlobalPost, India opposes Iran's nuclear program, but is angling for a waiver or exemption from the sanctions blocking oil purchases. Not only does it rely on Iran for 12-15 percent of its oil supply, but also New Delhi believes good relations with Tehran to be important given the potential of future conflicts with China and Pakistan.

To that end, India recently negotiated a scheme to pay for 45 percent of its oil purchases in rupees, thereby avoiding the sanctions against doing business with Iran's central bank. The new pressure to develop the natural gas fields, to which a consortium comprising state-owned ONGC, Oil India Ltd. And IndianOil Corp. own the rights, is presumably an effort to manuever New Delhi into an even stronger position against the U.S. sanctions.

According to the Times of India, the consortium in 2010 told Teheran it planned to develop the Farsi offshore block with an investment of some $5 billion over seven or eight years. But it did not sign a contract for fear of being blacklisted by the U.S. under the 1996 Iran-Libya Sanctions Act.

On Tuesday, Tehran called Obama's strengthening of the U.S. sanctions an "antagonistic move," Reuters reported. But a foreign ministry spokesman insisted the new measures would have no impact on Iran's nuclear program.