A plan by India and Iran to finalise the ‘development, financial and commercial’ terms for the prolific Farzad B gas asset in the Persian Gulf, discovered by New Delhi-based explorers led by ONGC Videsh, will be delayed at least till next February.
New Delhi has so far not been able to convince the Hassan Rouhani government in Tehran to let Indian explorers work on the project, even after diplomatic talks involving external affairs minister Sushma Swaraj and petroleum minister Dharmendra Pradhan. Under an earlier plan, the terms were to be finalised by October-end.
“The two sides agreed to make their best endeavours to conclude the definitive agreement by February 2017,” India’s petroleum ministry said in a statement on Wednesday. This is in contrast to a joint agreed document released in April after the meeting of Pradhan and Iran minister of petroleum Bijan Namdar Zanganch in Tehran. It had said, “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.”
While India is aggressively pushing for the deal, Iran does not seem happy with New Delhi’s offer. “Several rounds of negotiations so far have been held with the Indian state company on the development of Farzad-B. But ONGC’s financial proposal for the project is not acceptable,” Iranian newspaper Financial Tribune quoted the nation’s oil minister Bijan Namdar Zanganeh as having told Mehr News Agency.
The latest developments comes in light of an Indian delegation’s visit to Tehran on Tuesday, lead by Sunjay Sudhir, joint secretary (international cooperation) at the petroleum ministry. Post lifting of sanctions on Iran, India is seeking ways to deepen trade ties. Indian refiners are the second largest buyer of Iranian oil after China.
Discussions progressed on the heads of agreement, which will eventually lead to a definitive agreement. OVL is preparing a master development plan for the gas field, while also working on a gas pricing formula keeping in view the global price scenario, said the Indian petroleum ministry.
OVL, as the operator in the Farsi offshore exploration block in the Persian Gulf, drilled an exploration well in the Farzad-B area to discover gas. According to current estimates, Farzad-B has initial gas in place of 18.75 trillion cubic feet (tcf). OVL is partnered by Indian Oil and Oil India in Farzad-B.
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.