India plans to develop a large natural gas field in the south of Iran. Indian oil companies have recently made a spate of overseas investments in a bid to secure future energy supplies for the country.
State-run Indian Oil Corporation says it will invest an estimated $3 billion to develop a block in Iran's gigantic South Pars gas field. Along with the Iranian Petropars company, India also is expected to set up a plant to produce liquefied natural gas.
Iran has long sought a market in energy-hungry India for its natural gas. India in turn has been aggressively looking for investments in foreign oil and gas exploration projects.
Over the past few years, India's oil companies have invested in oil and gas assets in countries ranging from Angola, Sudan and Libya to Vietnam and Myanmar.
The investments are driven by India's need to secure supplies from across the globe.
Arvind Virmani, director at the Indian Council for Research on International Economic Relations, says the policy was framed after India faced a problem getting oil from the Middle East during the first Gulf war. "Since then there have been these thoughts and moves to get secured supplies across the world, diversified sources of supply whether it is Russia, Eastern Europe or we should also look at ASEAN, Indonesia is there. This is part of the overall policy of having energy security," he said.
Recently, Indian Petroleum Minister Mani Shankar Aiyer announced plans to invest in a gas exploration project in Russia.
Indian officials say the investments mostly are exploration deals because the opportunity to invest in oil and gas reserves that are already discovered is very limited.
India consumes about 100 million tons of oil products a year - two-thirds of it imported. The imports are expected to rise sharply in the coming years due to surging demand from its expanding economy.
India also is stepping up efforts to find gas reserves within the country, because output from its existing fields is declining sharply.