Future of Chabahar and Farzad B high on agenda for Rouhani visit to India

Progress on the upgrade of the Iranian port of Chabahar and delays over the awarding of contracts for the development of the offshore Farzad B gas field are expected to be high on the agenda this week when Iran’s President Hassan Rouhani is hosted by India’s Prime Minister Narendra Modi.
Situated on the Gulf of Oman and little more than 72km west of the Pakistani port of Gwadar – itself the beneficiary of some $1.1bn in investment from Beijing as it seeks to open up the China-Pakistan Economic Corridor (CPEC) – Chabahar is seen as both a regional  industrial hub and an  alternative trade route bypassing Pakistan and giving Afghanistan access to global markets. In 2016, India  and  Iran agreed  to sink $8bn  into the development of the port and the Chabahar Special Economic Zone, iincluding an aluminium smelter and a urea making facility. India has already built a 240-km road connecting Afghanistan with Iran, and this week it was announced that Tehran had issued licenses to 165 Afghan companies to invest and operate in the SEZ.
While  the first phase of the port’s development was completed last December, however, several Western manufacturers are shying away from supplying equipment to help with the port’s development for fear that the US may reimpose sanctions on Tehran.
 “This is now a bit complicated and difficult … If there are more sanctions in place, it will make it more difficult for other countries to plan business operations [in Iran], and I think Japan would have to reconsider this as well,” a Japanese  official said last month.
Farzad B, the giant Persian Gulf  gas field  with around 13 tr ft³ recoverable reserves and a daily production capacity of 1.1bn ft³ will also be up for discussion when the two heads of state meet. When Modi visited Tehran back in 2016, he and Rouhani gave the green light to a schedule that would have seen a Heads of Agreement signed off by the end of that year paving the way for a multi-billion dollar contract for Farzad B’s development, but it was not to be. The contract remains unsigned, with Iran accusing  India of inflexibility and India claiming that  Iran has  changed the goalposts and is adopting “delay tactics” in an attempt at negotiating a more favourable deal.