India and Iran will seal ‘development, financial and commercial’ terms to develop the prolific gas project, Farzad B, in the Persian Gulf by a consortium of New Delhi-based explorers led by ONGC Videsh latest by October 2016.
This was announced on Saturday in a joint-agreed document after the meeting between petroleum minister Dharmendra Pradhan and Iran’s petroleum minister Bijan Namdar Zanganch in Tehran on Saturday.
“Both sides agreed to discuss development plan, financial and commercial terms of Farzad B in a time-bound manner so as to conclude the discussions and consider awarding the development contract to ONGC Videsh-led consortium by October 2016,” the document said.
The government is strategically securing multi-billion dollar energy deals overseas backed by strong diplomatic ties. To move a step further, Pradhan is on a three-nation visit starting with Iran.
Signing a definite agreement to develop the prolific Farzad-B gas project by an Indian consortium is the top priority for New Delhi. Pradhan would also visit the UAE and Saudi Arabia during his tour.
The Farzad-B field, estimated to have 21.68 trillion cubic feet (tcf) of gas reserves, was discovered by Indian explorers in 2012, but no formal contract has been signed till date to exploit the resources. The US and other world powers’ sanctions on Iran prevented both sides from making any headway in commercial exploitation of the reserves.
In 2002, a consortium comprising ONGC Videsh, IOC and Oil India signed an agreement with the National Iranian Oil Company (NIOC) to develop the Farzad-B block of the Farsi field. Indian players spent about $90 million in finding hydrocarbon in the block.
Meanwhile, Iran also agreed to provide, on a long-term basis, natural lean gas. Both the countries would set up an ammonia/urea plant in the Chabahar Free Trade Zone with long-term offtake of urea to India. Indian companies are in the process of identifying a suitable Iranian company as the joint venture partner.
Following sanctions on the Islamic country by Western powers for its alleged nuclear activities in 2012, India drastically reduced its imports from Iran and started buying more from other suppliers such as Colombia, Mexico and Venezuela.
In FY14 and FY15, India bought nearly 10-11 million tonne of crude oil from Iran. In 2009-10, crude oil imports from Iran were at 21.20 million tonne, which was reduced to 18.50 million tonne in 2010-11; 18.11 million tonne in 2011-12. Imports further dropped to 13.14 million tonne in 2012-13.
On April 4, Reuters reported that India is set to import at least 400,000 barrels per day (bpd) of Iranian oil in the year starting April 1, with refiners looking to ramp up purchases after sanctions were withdrawn in January.
Average annual imports at that level will be the highest in at least seven years. Shipments in March were 506,100 bpd, a five-year high for a month.