India-Iran to finalise on Farzad-B gas project by October

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New Delhi | Published: April 10, 2016 3:15:59 PM

This is announced in a joint agreed document after the meeting between Indian petroleum minister Dharmendra Pradhan and minister of petroleum for Iran Bijan Namdar Zanganch in Tehran on Saturday.

India and Iran would seal ‘development, financial and commercial’ terms to develop the prolific gas project – Farzad B in the Persian Gulf by a consortia of New Delhi-based explorers led by ONGC Videsh latest by October 2016.

This is announced in a joint agreed document after the meeting between Indian petroleum minister Dharmendra Pradhan and minister of petroleum for Iran 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,” states the joint agreed document.

The Prime Minister Narendra Modi government is strategically securing multi-billion dollar energy deals overseas backed by strong diplomacy ties. To move a step further, petroleum minister Pradhan is on a three-nation visit starting Iran. Signing a definite agreement to develop the prolific Farzad-B gas project by an Indian consortium lead by ONGC Videsh (OVL) is top priority for New Delhi. Pradhan would also visit 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 to exploit the resources has been signed till date. The US and other world powers’ sanctions on Iran prevented both sides from making any headway in commercial exploitation of the reserves, with each blaming the other for the delay.

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 long-term basis, natural lean gas. Both the countries, would set up an ammonia/urea plant in Chabahar Free Trade Zone with long-term off take of urea to India. Indian companies are in the process of identifying a suitable Iranian company as the joint venture partner.

Post the sanctions on the Islamic country by Western powers for its alleged nuclear activities in 2012, India has 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 tonnes of crude oil from Iran. In 2009-10, crude oil imports from Iran were to the tune of 21.20 million tonnes, which was reduced to 18.50 million tonnes in 2010-11; 18.11 million tonnes in 2011-12 and further dropped to 13.14 million tonnes 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 from April 1, with refiners looking to ramp up purchases after the sanctions targeting Tehran ended in January.

Average annual imports at that level in the fiscal year just begun would be the highest in at least seven years, and would carry forward a bump in purchases that lifted March shipments to a five-year high for a month at 506,100 bpd.

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