Iran appears to have eased India out of two key projects that New Delhi has been long invested in: the Chabahar-Zahedan Railway Line and the development of the Farzad-B gas field that was discovered by ONGC Videsh Limited.

Iran now claims there was never an understanding with India to develop the 628km Chabahar-Zahedan Railway Line, which is to link the deep-sea port of Chabahar in the Iranian province of Sistan-Balochistan to Zaranj in Afghanistan.

However, external affairs ministry spokesperson Anurag Srivastava said that Indian PSU Ircon had completed the site inspection and the review of the feasibility report, and was waiting for Tehran to nominate an authorised entity to finalise the outstanding technical and financial issues.

As for the Farzad-B gas field, Srivastava said Tehran had informed New Delhi in January that it would develop the field on its own and would like to involve India appropriately at a later stage. “This matter remains under discussion,” he said.

The field has an in-place gas reserve of 21.7 trillion cubic feet, of which 60 per cent is estimated to be recoverable.

On Wednesday, a deputy to Iran’s Ports and Maritime Organisation, Farhad Montaser, had said that Iran had not inked any deal with India over the railway line.

He was reacting to news reports that cited the $400-billion dollar strategic partnership agreement being finalised between Beijing and Tehran to suggest that India may have lost to China the deal to develop the railway line.

Iran’s official IRNA news agency quoted Montaser as saying that Iran had only signed two agreements with Indians for investment in Chabahar: one related to the port’s machinery and equipment, and the second to India’s investment of $150 million.

“We had a list of Indian investments in Chabahar port, which also included the issue of Chabahar railway infrastructure and the railway, but during the negotiations it was not agreed,” Montaser said.

But the list of agreements signed on May 23, 2016, during Prime Minister Narendra Modi’s visit to Iran lists a memorandum of understanding between Ircon and the Construction, Development of Transport and Infrastructure Company (CDTIC) of Iran.

According to the details available on the external affairs ministry website, the “MoU will enable Ircon to provide requisite services for the construction of Chabahar-Zahedan railway line which forms part of transit and transportation corridor in trilateral agreement between India, Iran and Afghanistan. Services to be provided by Ircon include all superstructure work and financing the project (around USD 1.6 billion)”.

Srivastava provided details of the project while dismissing reports of India being out of the deal as speculative. He said that Ircon was working with the CDTIC and had held detailed discussions after the site inspection and review of the feasibility report on “other relevant aspects of the project which had to take into account the financial challenges that Iran was facing”.

This essentially relates to Washington’s unilateral sanctions on Iran after the US withdrew from the Joint Comprehensive Plan of Action, or the Iran nuclear deal.

Further, Srivastava said, these issues were reviewed in detail in December during the 19th India-Iran Joint Commission Meeting in Tehran.

“The Iranian side was to nominate an authorised entity to finalise outstanding technical and financial issues. This is still awaited.”

India has been invested in both projects since the Vajpayee years, riding the difficulties created by US sanctions even while deciding to stop importing oil from Iran.

Among the speculated reasons for Iran easing India out of these agreements are New Delhi’s visible cosying up to Washington and some of its key allies in the Gulf including Saudi Arabia, the abrogation of Article 370 and the treatment of Muslims in India.

Iran’s spiritual leader Ayatollah Ali Khamenei had tweeted his concern about the “massacre of Muslims” during the Delhi riots and had last year issued a rare criticism of India’s Kashmir policy after New Delhi enacted the J&K Reorganisation Act.

These issues have compounded the difficulties India is facing in doing business with Iran owing to the US sanctions.

The Chabahar port gives India access to landlocked Afghanistan and further to Central Asia. Pakistan does not allow transport of Indian goods overland to these areas although Afghan products are allowed to be exported to India via Pakistani territory under the Afghanistan-Pakistan Transit Trade Agreement.

Iran had in early 2018 invited Pakistan and China to participate in the further development of the Chabahar port, which lies just 72km from Gawadar, a similar port developed by China in Pakistan’s Balochistan province that is part of Beijing’s ambitious connectivity project – the Belt and Road Initiative.