In what marks renascent India-Iran commercial ties and New Delhi’s aggressive focus on overseas energy assets, both countries may finally agree on a deal for the development of the long-languishing Farzad-B gas field in the Persian Gulf by an Indian consortium led by ONGC Videsh (OVL), which helped discover the field in way back in 2008. Sources privy to the matter told FE that petroleum minister Dharmendra Pradhan would visit Iran on April 6-7 with the intent of signing a “definitive agreement” for the project.
Although an OVL-Indian Oil-Oil India consortium had spent $900 million in the Farzad-B field thanks to a 2002 preliminary pact with Iranian authorities, no formal contract to exploit the resources has been signed till date, due to the US sanctions that had prevailed on Iran.
While no headway in commercial exploitation of the reserves — pegged at 21.68 trillion cubic feet (tcf) of which roughly 60% is believed to be recoverable-, each side blamed the other for the delay and at one point, Tehran contemplated to re-auction the asset along with several others under revised terms of a new Iran Petroleum Contract (IPC).
With the lifting of the US sanctions on Iran in January, the prospect of a negotiated deal with the Indian consortium has brightened.
When asked if Indian explorers would sign a final deal to develop the Farzad-B block during Pradhan’s forthcoming visit to the West Asian country, an official said, “This is what we are trying to do. We are hoping for the best.”
When contacted, Pradhan refused to comment for the story. OVL managing director N K Verma did not respond to telephone calls.
Although the exact investments for the exploitation of the Farzad-B field will deoend on several factors including technological inputs and the terms of the contract, sources said taking out the recoverable reserves would entail $3-5 billion.
New Delhi had earlier suggested an integrated package for the Farzad-B project, which included swapping gas from the field with other Iranian gas at Chabahar port and also laying pipeline for transportation of the surplus gas to India.
Laying hands on rich energy assets overseas is seen as one of the primary goals of the Modid government. Since it came to power in May 2014, Indian PSU firms have inked agreements to the tune of $5.5 billion with Russia’s Rosneft. Of this, $2.53 billion are definitive agreements, which is also seen as a result of the rapport between Modi and Russian President Vladimir Putin.
Iran and six global powers reached a nuclear deal last year that could see an easing of sanctions against Tehran and a gradual increase in business opportunities in the country.
An OVL official told FE that New Delhi has submitted a revised proposal for the development of the gas field to Iranian side. A few months back, a delegation comprised of Rajiv Mehrishi, then secretary of department of economic affairs, and Ashutosh Jindal, joint secretary in petroleum ministry and officials from ONGC Videsh, Oil India and IOC visited Tehran and discussed the matter with Iranian government functionaries.
Iran, sources said, wanted India to submit details of gas production and the quantities it would want to import. Both the nations have been discussing on several fronts including — what could be the route for transport of gas – pipeline or ships. In the early 1990s, a 2,775 km Iran-Pakistan-India pipeline was also discussed, but the project never saw light of the day.