On Tehran, Delhi treads carefully, reading not very different from US

The Joint Intelligence Council, which reports to National Security Advisor M K Narayanan, prepared an assessment that was discussed at length in a meeting on April 11 which was attended by Foreign Secretary Shiv Shankar Menon, Defence Secretary Shekhar Dutt, Petroleum Secretary M S Srinivasan besides the head of the two intelligence agencies.

According to this, Iran is going to increasingly feel the debilitating impact of the UNSC sanctions and that signs of domestic discontent with Iran President Mahmoud Ahmadinejad are already visibly. While this largely stems from the poor showing on the economic front, it has also had political ramifications, with several important quarters in Iran questioning the logic behind such extreme and vituperative remarks over the nuclear stand-off with the US.

The key points in the JIC assessment are: n Iran has the fourth largest oil reserves in the world, but is in dire need of investments to the tune of $100 billion in the sector

• At current levels, Iran is not in a position to export large quantities of oil and may not be able to export after 2015. No fresh capacity has been added

• Isolation of Iran following UNSC sanctions will deter EU, Russia, Japan — which currently do have a stake — and other major economies from investing any further

• Iran unable to keep its commitments of oil exports even to OECD countries

• With inadequate refining capability, Iran is refining just 1.3 billion barrels of oil per day, which is even below its modest capacity of about 1.6 billion barrels per day

• Iranian economy ‘‘grossly mismanaged’’, with international banks already pulling out of the country

• Ahmadinejad under tremendous ‘‘domestic pressure’’

Despite this, the view taken — and voiced later by Union Petroleum Minister Murli Deora during talks with his Iranian counterpart Kazem Vaziri Hamaneh on April 25 — was that it would still be better to remain engaged with Iran. Deora asked Hamaneh to honour the contract the contract for 5 million tonnes of LNG signed between state-run companies of both sides.

Iran says that the LNG Supply and Purchase Agreement signed in June 2005 was no longer valid and wants to renegotiate the crude oil-linked LNG price to $55 a barrel from the agreed $31 a barrel.