India checking on legality to bring home Farsi block gas

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New Delhi, Oct 5: Even as the future of gas imports from the $8-billion Iran-Pakistan-India (IPI) gas pipeline project remains hazy, India has started exploring options to bring home the gas discovered by three state-owned oil companies—ONGC Videsh Ltd, Indian Oil Corp and Oil India Ltd—in the Farsi offshore block in Iran.

Official sources told FE that the petroleum ministry has decided to take a legal view on whether it can stake its claim on the gas discovered by the consortium of Indian oil & gas companies in the Farsi block and bring it home as equity gas.

“OVL, which is the operator of the Farsi block, has been directed by the petroleum ministry to check out the technical and legal formalities for bringing this gas to India. As the entire gas from the block would accrue to Indian oil PSUs, the ministry has asked OVL to submit a detailed roadmap in this regard within a month”, said a senior ministry official.

The three companies together hold 100% participating interest in the Farsi block, awarded by Iran to the trio in 2002. While OVL and IOC hold 40% interest each in the block, the balance 20% is being held by OIL.

Sources said that OVL has also been asked to work out options on swapping this gas with oil, besides looking at the possibility of developing LNG facilities in Iran and bringing this gas as LNG.

The recoverable gas reserves from this block are estimated at 12.8 trillion cubic feet (tcf). This is almost equal to the recoverable reserves from Reliance Industries eastern offshore D6 block in the Krishna-Godavari basin. The Farsi block is also estimated to hold over a billion barrels of oil. However, as the oil is very thick, the rate of recovery would be around 10%.

Gas discovery in the block was notified last year and a feasibility report on the gas discovered has also been submitted to the government of Iran. Gas production is likely to start from 2012. However, the government of Iran is yet to decide whether or not to give the development rights for the block to Indian companies, whose contract was only for exploration.