India’s largest oil and gas company Indian Oil Corporation Limited recently said that Iran could still invest in one of its subsidiaries for a refinery expansion project. Sanjiv Singh, chairman of Indian Oil stated that Iran has not ruled out its participation in the development at the Chennai Petroleum Corp. Ltd., which is a south India-based refinery that generates around 20,000 barrels per day (bpd).

Apparently, the participation of Iran had been questioned after India had reduced the import of Iranian crude oil following U.S. sanctions. However, the latest comments from Singh came just a few days after Indian government exempted rupee payments to the National Iranian Oil Co. (NIOC) for the imported crude oil from a hefty withholding tax.

Citing sources familiar with the matter, this exemption would further allow Indian refiners to settle around $1.5 billion of outstanding payments through direct rupee payments to NIOC. It is being expected that these payments could assist Iran to invest in Indian projects, especially in the expansion of Chennai Petroleum Corp.’s refinery.

Following a recent media conference, Singh was quoted saying that Iran has always been positive with the new rules and now the country should be able to invest. The Chennai Petroleum Corp. plans on investing up to $5.1 billion (356.98 billion rupees) for replacing the Nagapattinam refinery having 20,000 bpd capacity in the southern part of Tamil Nadu state with a plant of 180,000 bpd facility. Singh further said that a detailed feasibility report in regard to the expansion was yet to be prepared.

Further from the sources, NIOC’s Swiss subsidiary Naftiran Intertrade holds 15.4 percent stake in Chennai Petroleum, while 52 percent share is held by Indian Oil. The presence Naftiran Intertrade in India is focused on the expanding fuel demand which has turned the nation into a prized market for oil producers around the world.