Oil ties to get boost with Modi's weekend in Iran

Prime Minister Narendra ModiPrime Minister Narendra Modi will be in Iran on a two-day trip over the weekend that is expected to boost bilateral energy and trade ties besides giving a fillip to India's plans to connect with its extended neighbourhood.

India's external affairs ministry announced the visit in a press statement on Tuesday in which it said that Modi was making the 22-23 May trip at the invitation of Iranian president Hassan Rouhani.

Modi and Rouhani have met earlier at Ufa in Russia, on the sidelines of a Shanghai Cooperation Organization meeting.

Modi's visit to Iran comes after his visits to the United Arab Emirates and Saudi Arabia and ahead of trips to Qatar and Israel. It comes at a time of flux in the Middle East with the rise of the radical Sunni Islamic State militant group and an Iran freed of sanctions, which has made countries like Saudi Arabia and Israel wary of the rise of the Shia majority country.

''During the visit, the prime minister will call on the supreme leader of Iran (Ali Khamenei) and will hold talks on a wide range of subjects of mutual interest with President Rouhani.

''India and Iran share longstanding civilizational ties. Iran is situated in India's extended neighbourhood and the two countries have significant overlap in their economic and security space.

''The visit of the prime minister to Iran will seek to build on these commonalities by focussing on specific cooperation in regional connectivity and infrastructure, developing energy partnership, boosting bilateral trade, facilitating people-to-people interaction in various spheres and promoting peace and stability in the region,'' the ministry statement said.

Modi's visit will provide ''a timely thrust to the ongoing efforts of the two countries and their business entities to expand bilateral cooperation and mutually benefit from new opportunities in the wake of lifting of secondary sanctions against Iran earlier this year,'' it added.

Iran has been a major source of energy for Asia's third largest economy even during the period when the US imposed crippling sanctions on financial institutions dealing with Iran, making it impossible for countries buying Irani crude oil to pay their bills.

The sanctions - aimed at curbing Iran's allegedly clandestine nuclear programme - were lifted last year after Iran struck a deal with Russia, the US and its other Western allies to allow international monitors to inspect its nuclear facilities.

Earlier this month, India's ambassador to Iran Saurabh Kumar was cited by media reports as saying that India was accelerating a plan to pay nearly $6.5 billion it owes Teheran for crude oil imports.

Turkey's Halkbank has been identified to facilitate the payment and the money will be paid in euros, Kumar said.

Modi's visit is also expected to see progress on New Delhi's proposal for allowing ONGC Videsh Ltd (OVL) to develop the Farzad B gas field in Iran.

OVL, along with Oil India Ltd and Indian Oil Corporation Ltd, had earlier invested about $100 million in the Farzad B gas field, but production could not be started as Indian companies found it difficult to stay engaged in the hydrocarbon sector due to sanctions imposed by the US and the European Union.

New Delhi conveyed to Tehran its interest to return to the project after sanctions were eased last year.

India is also keen on developing Iran's Chabahar port which could ease India's connectivity problems vis-a-vis landlocked Afghanistan. India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease.

India, Afghanistan and Iran have finalised a trilateral transport and transit deal, which will allow Indian exporters to utilise the Chabahar Port, besides gaining access to markets in Afghanistan through Zahedan in the West Asian country.