he historic diplomatic breakthrough between Iran and the P5+1 represented by the West over the former's nuclear programme was greeted with great enthusiasm by global oil and gas companies. However, as Iran prepares to open its markets to the world, Indian oil and gas players may face too tough a challenge to take advantage of this historic opportunity.

Iran, which has the world's fourth largest proven oil reserves and second largest natural gas reserves, has suffered heavily economically over the past few years due to continuous financial sanctions. However, if final negotiations set to culminate by the end of June are a success, Iran's long neglected yet hugely commercially attractive hydrocarbons sector may see an influx of investment by the end of this year itself. The Iranian leadership, led by Ayatollah Khomeini, has made it clear that no concrete nuclear deal can be achieved before the US lifts economic sanctions that have been in place since 2006 under a United Nations resolution.

However, analysts in India, including those working closely with the government, believe that Indian companies may not be able to compete with Western energy giants in Iran. The reasons behind this lie both in India's limited financial might and technical expertise in exploration and production, and the fact that Iranian fields are in derelict condition due to years of underinvestment.

According to a new report by Gulf Intelligence, a consultancy service based in Dubai, developing Iranian fields and bringing them back up to modern technological standards is going to require billions of dollars, finances and technology that according to some, Indian companies may not have.

"If Iran's energy economy opens up to foreign money by this year, European and Chinese companies may gain the most, followed by the Americans," says an analyst working with an Indian government oil and gas company, who did not want to be identified.

"European companies have been based in Dubai for years now, quietly making small yet significant inroads into Iran despite the tight sanctions. Many of these companies have also reportedly held track 2 events with P5+1 governments and the Iranians to explore the prospects and rush in as soon as sanctions are lifted. India is still thinking about Iran, and has lost a lot of time. Oil is a cut throat business, no one will wait for you and you shouldn't wait for someone to invite you."

It is interesting to note here that the energy behemoth, London based BP (erstwhile named British Petroleum), was founded in Iran as the Anglo-Persian Oil Company in 1908. It was re-named as the Anglo-Iranian Oil Company in 1935, and finally as British Petroleum in 1954.

According to sources, advisers to the Narendra Modi government have pushed for Oil Minister Dharmendra Pradhan to lead an Indian delegation, including CEOs from Indian oil and gas sector and private infrastructure companies such as L&T, to Tehran at the earliest to make time before the expected breakthrough. A smaller delegation of Indian state oil companies and refiners has reportedly decided to visit Iran as early as next week, after finally realising that India was late to the party.

{ India has limited capital and technical expertise, and Iranian fields are in derelict condition due to years of underinvestment.

For India, Iranian natural gas holds larger interests than crude oil, and the offshore Farsi gas field project that an Indian consortium led by ONGC Videsh (OVL) acquired, was seen as a premiere example of Indian energy investment in the country. However, due to sanctions and American pressure, the project stalled and in 2013 after months of frustration and negotiations, the Iranians reportedly gave the field away to a local company. In July 2012, during peak sanctions, Tehran had warned New Delhi that if it did not commit to start operations in the oil and gas fields it had decided to invest in, it would look to cancel the agreed contracts and give the projects away to other "friends", which was an obvious reference to China. India had then hurriedly committed $1 billion to the Farzad B project in the Farsi field, which eventually saw little progress. Later, Iran even threatened Chinese companies as they also suffered delays in executing contracts due to sanctions.

From Iran's side, India also faced troubles over gas pricing as an economically troubled Tehran reportedly went against sovereign guarantees and looked to increase prices over supplying natural gas despite agreeing to fixed prices decided via negotiations. During this period, New Delhi had also gained sanction waivers from the US to allow it to conduct crucial oil and gas purchases for an economy that imports around 80% of its hydrocarbon requirements. Western diplomats have often labelled Iran as one of the toughest countries to deal with commercially and politically even before the sanctions.

However, Robin Mills, a Dubai based energy expert and author of The Myth of the Oil Crisis believes that Indian and Chinese companies still have a good chance in Iran, as they remained operational even during the period of sanctions.

"I don't expect to see American companies in Iran for quite a long time, European companies will be favored," Mills said.

"Indian and Chinese companies, which were active in projects during the sanctions period, even if not able to make much progress, still have an opportunity to be involved. Possibly they could partner with European companies on large projects. They also represent the key markets for Iranian oil and gas, making them more important as partners."

Success of these prospects depends on what kind of deal between Iran and P5+1 is agreed upon by June. However, India needs to be ready today to compete in a cutthroat environment as an investor in Iranian energy, rather than being a mere buyer.