New Delhi: Iran has offered ONGC Videsh Ltd and its partners a 30 percent stake in development of the Farzad-B gas field in the Persian Gulf, which was discovered by the Indian consortium, officials said. ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), in 2008 discovered a giant gas field in the 3,500 square kilometer Farsi offshore block.
In April 2011, it submitted a master development plan (MDP) to bring the discovery, which was named Farzad-B, into production but negotiations were halted when international sanctions were slapped on Iran over its nuclear plans.
Negotiations resumed in 2015, but in February 2020, National Iranian Oil Company (NIOC) reported that the Iranian government had decided to award the contract to develop the field to a local company.
The exploration contract, under which OVL and its partners discovered gas reserves in the Farsi block, provided for the discoverer to be part of the field development, the officials said.
Citing the Exploration Services Agreement, Iran has asked the Indian consortium to exercise its rights to participate in the development contract up to a minimum 30 percent stake, they said, adding that Tehran has asked the Indian firms to exercise the right within 90 days, failing which. considered as a rejection of the offer.
Officials said for further discussion to participate in the development contract, communications and comments on Confidentiality Agreement (CA) were sent to NIOC in March and a reminder in the following month.
However, NIOC did not respond to this, they said.
OVL holds a 40 percent stake in the 3,500 square kilometer Farsi offshore exploration block in Iran’s Persian Gulf. Indian Oil Corp (IOC) holds a 40 percent stake and the remaining 20 percent is with Oil India Ltd (OIL).
The Exploration Service Contract (ESC) for the Block was signed on December 25, 2002 and OVL in 2008 made a giant discovery on the block, which was later renamed as Farzad-B.
The field holds 23 trillion cubic feet of in-situ gas reserves, of which approximately 60 percent is recoverable. It also holds gas condensates of about 5,000 barrels per billion cubic feet of gas.
The Indian consortium submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority of NIOC for the development of Farzad-B gas field.
Development Service Contract (DSC) of the Farzad-B gas field was negotiated to November 2012, but could not be finalized due to difficult conditions and international sanctions on Iran.
In April 2015, negotiations resumed with Iranian authorities to develop the Farzad-B gas field under a new Iran Petroleum Contract (IPC). This time, NIOC presented Pars Oil and Gas Company (POGC) as its representative for negotiations.
From April 2016, both sides negotiated to develop the Farzad-B gas field under an integrated contract covering upstream and downstream, including monetization/marketing of the processed gas. However, negotiations remained inconclusive.
In 2016, Iran said it was examining the Indian proposal but that a deal was unlikely due to the difference between Iran’s required gas price and India’s offer.
India has offered a USD 6.2 billion development plan and a gas price of around USD 4 per million British thermal unit for Farzad-B in 2018.
Meanwhile, based on new studies, a revised Interim Master Development Plan (PMDP) was submitted to POGC in March 2017, officials said, adding that in April 2019, NIOC proposed development of the gas field under the DSC and withdrawal of crude gas. of NIOC at landing point.
However, due to the imposition of US sanctions on Iran in November 2018, technical studies could not be concluded, which is a precursor to trade negotiations.
In February 2020, NIOC informed its intention to terminate the Farzad-B development contract with an Iranian company. In March 2021, it notified the Indian consortium of signing the development contract with Petropars, a local Iranian company.
The Indian consortium has so far invested around $85 million in the block. The contract envisages that the Indian consortium will be reimbursed the expenditure together with a fixed rate of return.