(EnergyAsia, August 28 2015, Friday) — India wants to activate a shelved decade-old agreement to import liquefied natural gas (LNG) from Iran as the Islamic regime prepares to be freed of international trade sanctions following breakthrough talks with six world powers over its nuclear energy programme.

Petroleum Minister Dharmendra Pradhan told India’s Parliament that state-owned gas utility GAIL has initiated talks with Iran to revive the agreement that it and two other Indian firms signed with National Iranian Gas Export Company (NIGEC) in June 2005. GAIL had agreed to import two million tonnes of LNG a year, while IndianOil Corp (IOC) signed for 1.75 million tonnes and Bharat Petroleum Corp wanted 1.25 million tonnes. The deal was never implemented, possibly because Iran may have suffered seller’s remorse in agreeing to a very low term price of US$3.215 per million Btu.

Even at today’s low oil and gas prices after the 60% collapse over the past year, that term price would be considered cheap and uneconomic as Japan is paying about US$7.50 to US$8 per million Btu for its LNG imports.

GAIL said Iran has yet to respond to its request to implement the agreement that would require Iran to make a substantial investment to develop a gas liquefaction terminal and marine facilities at Chabahar port on the Gulf of Oman.

The two countries signed an agreement in 2003 to develop the port that would enable India to conduct trade with Iran without going through Pakistan. India has plans to help Iran develop Chabahar into a major free trade zone to facilitate its trade with Central Asia and the Middle East.

Indian Foreign Secretary S. Jaishankar, who recently visited Iran to boost bilateral energy and security cooperation, described Iran as offering his country an alternative route to Central Asia.

“The resolution of the nuclear dispute and lifting of sanctions will allow our agenda of energy and connectivity cooperation to unfold seriously,” he said in a lecture at the International Institute for Strategic Studies (IISS) in Singapore on July 20.

With the global economy slowing down, India is eager to revive trade with Iran to drive its own long-term growth. Iran holds large easily accessible oil and gas reserves that will help India meet its projected one-third increase in natural gas demand over the next three years, said Minister Pradhan. With trade sanctions lifted, Iran will also be a significant market for Indian exports as well as employer of Indian migrant workers to help rebuild its creaking infrastructure.

Even before its release from international trade sanctions, Iran showed its urgency to court foreign investment by awarding India’s Jawaharlal Nehru Port Trust and Kandla Port Trust the contract to upgrade two of Chabahar port berths to handle container trade.

Despite the trade sanctions, Iran’s exports to India, comprising mostly oil and gas, reached an estimated US$9.8 billion last year while imports of automobile parts, industrial equipment, agricultural products and chemicals totalled around US$4.2 billion. India is confident it can substantially boost exports to Iran once trade sanctions are lifted.