India's largest transporter and marketer of gas, government-owned GAIL India, plans to set up a US$2.3 bln petrochemical plant in Iran. Engineers India Ltd. has been appointed to conduct feasibility studies for the 3 mln tpa plant expected to be located in proximity to the gigantic South Pars gas field in Iran. The project could tap Reliance Industries Ltd (RIL) and an Iranian government-owned company as partners.
A source has confirmed that GAIL is likely to set up the plant in partnership with the Iranian National Petrochemicals Company. Interestingly, joint ventures between Indian and Iranian government-owned companies have not been fruitful so far. An agreement signed two years ago by GAIL and Indian Oil Corporation (IOC) and National Iranian Gas Export Company (Nigec) to supply liquefied natural gas (LNG) from Iran has not worked out.
Another agreement between IOC and Iran to set up an LNG liquefaction plant in Iran will not be extended after the deadline expires this month.
India is also likely to be left out of the ambitious US$7.4 bln Iran-Pakistan-India (IPI) gas pipeline, which was to bring Iranian gas from the South Pars field to India. India did not attend the last two meetings on the pipeline, as disagreements arose with Iran over gas pricing and transportation charges with Pakistan. A draft agreement between Iran and Pakistan is likely to be signed at the end of this month.
Politically, relations between the two countries have also been strained after India voted against Iran on two crucial issues at the Governors' Board of the International Atomic Energy Agency (IAEA) in 2005 and 2006 - the first time to criticise Iran for not meeting its obligations under the Non-Proliferation Treaty and the second time to report Iran's file to the UN Security Council for possible possession of weapons of mass destruction.