Reliance Industries will be a 50 per cent partner in the buyback contract, which will allow investors to recover their costs with interest from the oil produced at the fields. An Iranian oil company will have a 10 per cent stake in the project, while the rest of the investment (and the subsequent returns on them) will be ONGC Videsh's.

The bids, being pursued with vigour by ONGC Videsh and Reliance Industries, will give India a foothold in the new oil mart opening up in Iran. The oil-rich country, which was buzzing with petroleum companies from across the world once, became forbidden territory after the Islamisation of Iran in the mid-seventies.

Iran is inviting investment in eight oilfield development projects, 11 exploration blocks, 13 gas injection projects and two refineries. Iran expects the successful biddersfor the eight oilfields on offer to invest in technology that will help revive the old wells and increase their productivity.

The buyback arrangement is significantly different from the usual production-sharing contracts (PSCs), in which the investors own the property. In this case the government of Iran will continue to own the oilfields, but will allow the investing companies to earn a return on the funds ploughed into the projects.

The Reliance Industries-ONGC Videsh-Iranian consortium is bidding for the development of four offshore oilfields in Iran, Foroozan, Salman, Sirri ``C'' and ``D'' and Hendijan. Initially, L&T was also keen to be part of the club, but the talks with its Indian partners did not progress too far.

Incidentally, Reliance Industries and ONGC Videsh are jointly bidding for a discovered oilfield in Iraq as well. The bid for the property in Iraq is part of the efforts of the national oil company (with a mandate from the centre to scout for equity oil overseas) to gain a presence inthe oil producers' hub.

In its previous incarnation as Hydrocarbons India Ltd in the sixties, ONGC Videsh had worked in Iran as part of a consortium called IMINOCO. The team had also discovered the two offshore oilfields there called ``Raksh'' and ``Rosatm.''

When in July last year Iran announced its intentions of opening its doors to foreign investment once again, ONGC Videsh decided to renew its ties. At a conference in London, Iran sought technology to improve the productivity of some of its dilapidated oil wells.

ONGC Videsh, which had despatched a representative to the conference on `new development opportunities in the Iranian oil and gas sector,' found the opportunity it was looking for. When Iran invited offers for operating the old oilfields, a team comprising top brass of ONGC Videsh and RIL visited the country to examine the property which was followed by a bid for the four offshore oilfields.