KOLKATA (miningweekly.com) – Changing geopolitical alignments and receding investment prospects in Iran are prompting a consortium of Indian oil companies to push for domestic energy security through wider exploration and production projects in Israel and Latin American countries.

With the $5-billion investment offer to develop the Farzad B oil gas asset in the Persian Gulf not expected to see the light of day, the consortium of Indian national oil companies, including ONGC, Oil India Limited and Indian Oil Corporation, will be putting its weight behind bids for 24 oil and gas blocks put up for development by the Israeli government, government sources have said.

The sources acknowledged that the deadlock in India-Iran government-to-government talks on Farzad B and the subsequent revival of India-Israel strategic bilateral relations also had a bearing on Indian oil companies’ shift in focus on overseas investments.

It was pointed out that with the US government putting renewed pressures on Iran and weakening of the nuclear deal, stronger diplomatic ties between the US and Saudi Arabia to counter Iran in West Asia and the recently revealed covert ties between Israel and the Saudi government, were geopolitical developments that impacted India’s overseas energy strategic goals.

Indian Prime Minister Narendra Modi’s July 2017 visit to Israel, the first ever by an Indian head of state, and a reciprocal visit by Israel Prime Minister Benjamin Netanyahu, scheduled from January 14, 2018, indicate the growing bilateral relations and shift India’s focus in the region.

Government sources said that back-to-back visits for India and Israel heads of government indicate that relations between the two countries are moving from “covert to overt” with the aim being to expand investment deals in the oil sector to collaborations in the defence sector, as a precursor to an eventual free trade agreement between the two countries.

After Iran accused India of “inflexibility” and the latter charged the Gulf nation with “shifting the goal posts” and “delaying" investments in Farzad B by India oil companies, opportunities to develop Israeli oil and gas blocks would be ithe deal counterfoil to the non-starter projects in Iran, the sources said.

One of the deal breakers was the Iranian government’s insistence that the Farzad B project include downstream investments ato which the Indian consortium acceded, upping the commitment to $11-billion. However, the buyback clause suggested by the Iranian government was higher than that acceptable by the Indian companies.