Virendra Pandit
New Delhi: With Iran awarding the contract for developing a giant oil field to a local company on Monday, India’s ONGC Videsh Ltd lost an important gas field in the Persian Gulf, called the Farzad-B gas field, the Indian behemoth had discovered in 2008.
The Indian consortium, led by ONGC, had so far invested USD 400 million (nearly Rs.3,000 crore) in the block.
India’s slow tilt towards the Arabs and Israel in the Middle Eastern politics may be the reason for this important decision by the Iranian government, which is already facing sanctions from America and other countries on the nuclear deal issue.
“The National Iranian Oil Company (NIOC) has signed a contract worth USD 1.78 billion with Petropars Group for the development of Farzad-B Gas Field in the Persian Gulf,” the Iranian oil ministry’s official news service Shana reported.
“The deal was signed on Monday, May 17, in a ceremony held in the presence of Iranian Minister of Petroleum Bijan Zangeneh in Tehran.”
The said gas field holds 23 trillion cubic feet of in-place gas reserves, of which about 60 percent is recoverable. Besides, it also holds gas condensates of about 5,000 barrels per billion cubic feet of gas, media reported.
The buyback contract signed on Monday envisages daily production of 28 million cubic meters of sour gas over five years, Shana said.
ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), had, in 2008, discovered a giant gas field in the Farsi offshore exploration block. OVL and its partners had offered to invest up to USD 11 billion for the development of the discovery, which was later named Farzad-B.
According to media reports, NIOC had long back informed OVL of its intention to conclude the contract for Farzad-B development with an Iranian company, in an apparent rejection of the Indian firm’s bid. After this, it kept sitting on OVL’s investment proposal for years.
The 3,500 square kilometer Farsi block sits in a water depth of 20-90 meters on the Iranian side of the Persian Gulf.
OVL, with 40 percent operatorship interest, had signed the Exploration Service Contract (ESC) for the block on December 25, 2002. Other partners included state-owned Indian Oil Corp (IOC) with a 40 percent stake and Oil India Ltd (OIL) holding the remaining 20 percent stake.
OVL had discovered gas in the block, which was declared commercially viable by NIOC, on August 18, 2008. The exploration phase of the ESC expired on June 24, 2009, media reported.
The Indian firm had also submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for the development of Farzad-B gas field. A Development Service Contract (DSC) of the Farzad-B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions against Tehran.
Because of these sanctions on Iran, imposed in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations.
