The only proposal to see forward movement is exploration participation by an Indian Oil-led consortium including Oil India and OVL, in IranÕs Farsi block where oil and gas has been discovered. (Photo by Ali Hassanpour)

Doing business with Iran is never easy. As reported by Outlookindia.com, the industry view is that the US factor has overshadowed economic relations between India and Iran where investment proposals take a long time to be processed. The topic is so sensitive that practically none of the groups involved there wants to talk about investments.
The numbers speak for themselves: India’s planned investments in Iran are estimated at $40 billion, those on the ground add up to just $3.7 billion. And six years after India sought to push investments by raising the line of credit from $10 million to $200 million, only $85 million of the facility have been utilized.
Bilateral trade has been registering over 15 percent growth annually to reach $9.33 billion, with oil accounting for the bulk of imports. “Iran’s advantage is oil and gas, but nothing much has happened on that front either,“ says an oil industry honcho.
There have been setbacks too. A component of the 2005 LNG deal was that the state-owned ONGC would be given Jufeyr, a small exploration block for development, and 10-20 percent participation interest (PI) in the oil- and gas-rich Yadavaran block. While Jufeyr went to a Belarus firm, China’s Sinopec was awarded 51 percent interest in Yadavaran along with a deal to receive 10 million tons of LNG.
Says OVL MD R.S. Butola: “It was always understood that the Chinese would get the operatorship of Yadavaran. Now that the deal has been signed with Sinopec, we hope Iran will make an offer to ONGC. We are expecting 20 percent PI.“
However, it may not be that easy as it could mean the Indian government agreeing to reopen the LNG deal. Another important energy deal awaiting a formal nod is the pact signed by Indian Oil with the National Iranian Oil Company (NIOC) in ’04 for setting up a $5.5-billion integrated LNG project. Says Indian Oil CMD Sartak Behuria, “Our proposals are pending, the Iranians have to take a decision.“
There are infrastructure projects too awaiting approval. In ’04, a consortium headed by the Hinduja group (along with RITES and Ircon) won the contract to develop highways and the railway line from Chabahar port to Bam in southeast Iran.
The only proposal to see forward movement is exploration participation by an Indian Oil-led consortium including Oil India and OVL, in Farsi block where oil and gas has been discovered. So far, OVL has invested around $55 million in the block. India hopes to get some share in the development stage of the block once commercial viability is established.
For now, industry is surprised by the recent State Bank of India decision to withdraw the LC facility to traders dealing with Iran after the US blacklisted four Iranian banks.
SBI officials say bilateral trade hasn’t slowed down as traders have alternate financial settlement mechanisms. Commerce secretary G.K. Pillai also added that “an inter-ministerial meeting is to be held soon to restore the credit facility“.
Yet, for all the uncertainty, Iran is still seen as having good oil and gas investment prospects. And that continues to keep India Inc excited.

Gas-producing countries will discuss the idea of forming a “gas OPEC“ along the lines of the existing oil group in June in Moscow, Qatar’s energy minister said on Friday.
“I think we will discuss it at the next meeting at ministerial level of the Gas Forum in June this year“ in Moscow, Abdullah bin Hamad
Al-Attiyah said at a news conference at the World Economic Forum in Davos, Switzerland.
He said members of the existing Gas Exporting Countries Forum (GECF) had appointed a “high expert“ to look at the idea of a gas OPEC at a meeting in Doha in 2007. He will report his conclusions in Moscow.
According to Middle-East-Online.com, forming such an organization would not be a simple matter, however, he cautioned, not least because of the different ways that gas markets work around the world.
Talk of a gas body gained momentum in 2006 when Europe’s two main natural gas suppliers, Gazprom of Russia and Algeria’s Sonatrach, signed a partnership accord.
Talk of an organization to control gas output and so prices--the idea has first been put forward by Iran--has alarmed western countries which rely heavily on imports to fuel their economies and heat homes.
Russian President Vladimir Putin, whose country has the world’s largest gas reserves, said last February a gas OPEC was “an interesting idea.“
Founded in 2001, the GECF is an informal organization grouping 15 countries. It includes Russia, Iran, Qatar, Venezuela and Algeria, which together control 72 percent of world gas reserves and 42 percent of production.
The 13-member Organisation of Petroleum Exporting Countries (OPEC) was formed in 1960 and is the supplier of more than a third of world oil.
It controls oil prices by setting the output of its members, using a quota system that limits supply to the market.
With the exception of Russia, most of the leading gas producers are also OPEC members, such as Algeria, Iran, Qatar and Venezuela.
Analysts say the structure and technical limitations of the gas market are not conducive to price fixing, however.

UN Secretary-General Ban Ki-moon has called on world leaders to agree some 2010 milestones towards achieving the 2015 Millennium Development Goals.
The early target would include lifting 75 million people out of extreme poverty in Africa, admitting 25 million more children in school, saving four million more children’s lives, providing skilled health personnel for attending 35 million births, and providing access to drinking water for 70 million people.
According to AP, Ban Ki-moon said only 30 percent progress has been achieved until now. “Without extraordinary effort we will fail to achieve the MDGS,“ he said. The MDGs are a set of goals agreed in 2000, with 2015 as a cut-off date for several specific achievements.
The targets include halving the number of people living in absolute poverty (currently over 1 billion), universal primary education, promotion of gender equality and empowering women, reduction of infant and maternal mortality by two-thirds, halting HIV/AIDS, malaria and other major diseases, ensuring environmental sustainability and ensuring significant improvement in the lives of at least 100 million slum dwellers by 2020, and achieving a global partnership for development.
Ban Ki-moon described progress on the MDGs as “a development emergency“ at a special WEF session called to discuss the goals. Others who took part in the special session were Britain’s Prime Minister Gordon Brown, Nigeria’s President Umaru Musa Yar’Adua, Jordon’s queen Rania al-Abdullah, Microsoft chief Bill Gates, and singer Bono.
Ban Ki-moon said the world must “rededicate“ 2008 for addressing the problems of a billion people who live on less than a dollar a day. For once, the movers and shakers of global business and politics moved away from their profit-oriented concerns to the problems of the deprived. But little was agreed.
Bono was strongly critical of the failure to address the MDGs. “The time for ’moral compact’ and ’moral’ persuasion to fulfil the MDGs is well over,“ he said. He asked whether the corporate world and governments are ready to accept “legally binding commitments to fulfil the MDGs by 2015.“
Bono, who is leading the ’Debt, Aids, Trade, Africa’ (DATA) campaign, made a “call to action on the Millennium Development Goals.“
But there was no response to Bono’s call for legal commitments. The only agreement so far is to convene a UN special session in September to address the tardy implementation of the Millennium Development Goals.
There was no dearth of renewed calls for more action. Prime Minister Brown said he will convene a meeting of the global private sector in May to announce new measures to support the MDGs. Bill Gates called for concerted action both by the private sector and governments.
Kumi Naidoo, secretary-general of the civil society group Civicus which is at the forefront of the Global Call to Action against Poverty, said issues relating to poverty do not get the same treatment as the financial and banking market crisis, which dominated Davos 2008.
“There are double standards in addressing the problems arising from the United States as compared to the deathly conditions in Africa,“ he said.

Maize is a staple in South Africa but with prices plunging, commercial farmers have left an estimated 1 million hectares of available land idle.

South African maize farmers are pushing hard to change a government decision to exclude their crops as feedstock for bioethanol, in view of food security concerns.
Shortly after the government unveiled its biofuel strategy last December after months of dilly-dallying, Minister for Agriculture, Lulu Xingwana, opened a small window of hope for the maize and maize sorghum lobby by promising to change the Cabinet decision if they could prove that surplus stocks could be produced Ipsnews.net reported.
Maize is a staple in southern Africa. But with prices plunging, South African commercial farmers have left an estimated 1 million hectares of available land idle. Production has remained around 8.6 million tons annually--a figure that meets the demand of consumers while still ensuring a profit for farmers.
In an uncertain market, the balance can easily be disturbed, leading to huge losses, farm experts say. “Maize farmers are business people. And like any other business people, they want to see a good return. Few are willing to pour in extra cash to produce crops without an assurance they will be rewarded for their efforts,“ says Wessel Lemmer, a senior economist at Grain South Africa.
Yet Lemmer and other industry players are convinced that were all available land to be cultivated, the yield would go up by at least 3 million tons--enough to satisfy the biofuels market without any negative impact on food security.
Lourie Bosman, the president of AgriSA, said that the government has been provided “all necessary documentation and research to prove that surplus production is possible.“
For agriculture experts, the inclusion of maize as a feedstock would open up many more possibilities for small black farmers in the former ’homelands’ to produce for the market. The homelands were 10 tribal reserves demarcated exclusively for black people in apartheid South Africa.
These were granted nominal self-rule but the status was never internationally recognized. Neither did the promised economic development in the homelands materialize fully.
The maize lobby insists that the biofuel market would benefit farmers, and also be advantageous for farm labor and the transport sector.
Axing maize from the strategy has put a question mark on the viability of the Ethanol Africa project--a private sector initiative that has gobbled up around 5.5 million dollars from investors even though construction has not started on the plant in Bothaville in the Free State, the maize heartland of South Africa.
Johan Hoffman, chief executive officer of Ethanol Africa, told IPS: “The minister of agriculture wants farmers to prove that we can produce a maize surplus. There is no doubt that it is possible. I am positive that Bothaville will get an ethanol plant once there is clarity about the way forward from the government. But in the meantime, building activities on the plant had to be put on hold.“
While the maize lobby is awaiting further developments, the state-owned Central Energy Fund (CEF) is investigating the possibility of setting up five biofuel plants in the country--for processing of sugar beet and sugar cane into bio-ethanol, and soy beans, sunflowers and canola into bio-diesel.
The government has downscaled the targets for biofuels: from an initial 4.3 percent of the total fuel production in the country to only 2 percent. Wessel as well as Bosman say that this translates into a mere 400 million liters of biofuel. South Africa burns up 20 billion liters of fossil fuel annually.
“From a personal perspective, the exclusion of maize is not good,“ Sibusiso Ngubane, projects manager of the CEF said. “It means that fewer players can enter the field and fewer resources to draw from.“
As projects manager of the CEF, Ngubane is closely involved with the investigation into finding the right location for the biofuel plants in Pondoland (in the southern part of KwaZulu-Natal), Makhatini Flats (in the northern parts of the province), Hoedspruit in the Limpopo province, Cradock in the Eastern Cape, and Sasolburg in the Northern Free State.
The government through CEF as well as private sector initiatives like the Black economic empowerment partner, Siyanda Biodiesel, will fund the project at Sasolburg. CEF and the Industrial Development Corporation (IDC), South Africa’s development financier, will fund the other projects.