In a snub to India, Iran has signed initial pact with Russia's Gazprom for developing ONGC-discovered gas field of Farzad B but has kept the door open for awarding it to the Indian firm. With Tehran delaying the award of rights to develop the 12.5 trillion cubic feet gas field to its discoverer - ONGC Videsh Ltd - India decided to cut oil imports from Iran by a fifth in 2017-18. Iran retaliated by first cutting by one-third the time it gave to Indian refiners to pay for oil they buy from it as also raising ship freight rates, and now by signing a memorandum of understanding (MoU) with Russian gas monopoly Gazprom. Iranian Oil Minister Bijan Namdar Zanganeh confirmed signing of the agreement with Gazprom while talking to Argus in Vienna. "Yes. We have signed an initial agreement with them (Gazprom) or Farzad, the North Pars and Kish fields," he said. Gazprom, on its website said, it signed a MoU with National Iranian Oil Co (NIOC) in Kremlin on March 28 when Iranian President Hassan Rouhani met his Russian counterpart Vladimir Putin. Iran has been unhappy with the USD 5.5 billion investment plan that OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has submited for development of the Farzad-B field in the Persian Gulf. Since it has to reimburse all of the money that is invested, together with a fixed rate of return, it wants the investment to be lowered and OVL commit to buying gas at a price fixed by it. OVL, on the other hand, says it will take up development only if the terms are economical and cannot absorb any cost and the price of gas should be comparable to rates in current market. Sources said Indian refiners have cut oil imports from Iran by a fifth to 190,000 barrels per day (bpd) in 2017-18 from 240,000 bpd in the previous fiscal. Iran, Indias third biggest oil supplier, used to give a 90-day credit period to refiners like Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) to pay for the oil they would buy from it. Now, Tehran has reduced this to 60 days, essentially meaning that IOC and MRPL would have to pay for the oil they buy from Iran in 60 days instead of previous liberal term of 90 days, sources said. Iran oil sale terms were the most attractive for Indian refiners. Besides, a liberal credit period, it also shipped the oil to India for a nominal 20 per cent of normal ocean freight. Also Watch: [jwplayer zOi7xxSa] Other Middle-East sellers offer not more than 15-day credit period. Sources said National Iranian Oil Co (NIOC) has also decided to cut the discount it offers to Indian buyers on freight from 80 per cent to about 60 per cent. Since the lifting of western sanctions, Iran has played hardball over award of the field which was discovered by OVL. The two nations were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017. Now, the deal is being targeted to be wrapped up by September after the two sides agree on a price and a rate of return for OVL's investments. Farzad B was discovered by OVL in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India Ltd and Indian Oil Corp (IOC), over USD 80 million. Sources said that in the master development plan (MDP), the company has estimated cost of putting up a facility to convert gas into LNG and shipping it to India at USD 5-6 billion. The field in the Farsi block has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable. New Delhi is keen that the gas from the field comes to India to feed the vast energy needs.