India is looking to strengthen its energy ties with Iraq with plans for an LNG terminal in the West Asian nation and ONGC Videsh resuming exploration in a block under force majeure since 2003.

Officials said a team from state-run Indian Oil Corporation and Engineers India Ltd will soon visit Iraq and explore the possibility of setting up a liquefied natural gas (LNG) terminal and transporting of the gas to India.

Iraq does not possess the technology to capture gas from its hydrocarbon blocks, which are burnt and released into the environment.

Analysts said with a new nexus developing amongChina, Iran and Saudi Arabia, Delhi are reviewing its energy diplomacy in the region — building closer ties with Iraq is part of the exercise.

India is looking at an LNG terminal option to diversify supplies and strengthen its energy security. The transported gas will be converted back to LNG for city gas distribution as well as for use by the power, fertiliser and steel sectors.

Iraq is one of the biggest gas-flaring countries as it lacks facilities to capture and process the gas to convert it into fuels or export it as LNG. As per estimates by global agencies, Iraq flares around 50 million standard cubic metres per day (mscmd) of natural gas. In 2022-23, India’s LNG imports stood at 19.9 million tonnes, which is equivalent to 71.6 mscmd of natural gas.

The Centre is also looking at resuming operations at ONGC Videsh Ltd’s exploration block in Iraq, which has been under force majeure since 2003.

‘‘Block 20’’, earlier known as Block 8, is a large on-land exploration block in the western desert of Iraq, spread over 10,500 sq km.

OVL had acquired a 100 per cent stake in the block by signing the exploration and development contract in November 2000, However, force majeure was declared in 2003 amid security concerns.

Meanwhile, the demand for diesel and petrol fell in the first half of July as the fury of the monsoon flipped travel plans and reduced the market in the farm sector, preliminary industry data showed.

Demand for diesel fell 15 per cent to 2.96 million tonnes on July 1-15 compared with the year-ago period.

Petrol sales dropped 10.5 per cent to 1.25 million tonnes during the period.

Adani denied licence

Oil regulator PNGRB has rejected Adani Total Gas Ltd’s application for a licence to retail CNG to automobiles and piped gas to household kitchens in Noida on grounds that it does not meet the criteria.

The Petroleum and Natural Gas Regulatory Board (PNGRB) in an order dated July 14 said Adani Total Gas Ltd does not fulfil the requirements of law and so its application is rejected.