As US and European sanctions cripple its economy, Iran today offered India a new production sharing regime for oil exploration in an attempt to keep its third largest buyer of oil engaged.

The offer was made by Iranian Foreign Minister Ali Akbar Salehi during his talks with visiting External Affairs Minister Salman Khurshid at the India—Iran Joint Commission Meeting where energy was a subject of co—operation.

India has in the year to March 31 cut import of oil from Iran by 26.5 per cent as US and European sanctions made it difficult to ship oil from the Persian Gulf nation.

Iran traditionally offers only service contract to foreign companies, giving them a pre—fixed rate of fee for their effort in exploring and producing oil.

In contrast, a production sharing contract will give the foreign country ownership of the oil explored and produced as also the freedom to ship it wherever they want.

Indian state—run firms led by ONGC’s contract for exploring the gas—rich Farsi block too is a service contract which if converted into a production sharing regime would mean that New Delhi can get close to 13 trillion cubic feet of gas.

While making the offer Salehi said Iran should be considered a reliable source of energy for India, sources said.

India imported about 13.3 million tonnes of crude oil from Iran in 2012—13 fiscal, down from 18.1 million tonne in the previous year. It now pays Tehran only in rupee in an Indian bank after US and European sanctions blocked dollar and euro routes.

On the rupee payment issue, Iran said that the excess accumulated in India could be routed to other projects in India, including infrastructure.

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