- Monday, November 25, 2024
By: Shubham Ghosh
AN Indian consortium led by ONGC Videsh Ltd (OVL) contractually possesses right to take a 30 per cent interest in the Farzad-B gas field development in the Persian Gulf even after Iran decided to award its rights to a local firm, top officials have said.
In February last year, National Iranian Oil Company (NIOC) told India about its plan to conclude the contract for Farzad-B development with an Iranian firm. In May this year. It awarded a contract worth $1.78 billion to Petropars, a Tehran-based company.
“The field was discovered by the Indian consortium and naturally it was interested in bringing it to production and submitted a development plan. But Iranian government decided to go ahead with the project without a foreign participation,” Press Trust of India cited a government official as saying.
While many felt this gave India a setback, the official thought otherwise.
“But all is not lost in the project. Contractually as the original licensee and someone who has discovered the field, the Indian consortium has a right to take a 30 per cent interest in the project involving development of reserves and production of gas,” he added.
In July 2019, OVL sought details of terms and conditions of the development contract expressing the Indian consortium’s interest in the project. After NIOC did not respond, OVL has sought details in writing a couple of weeks ago, another official said.
“The contract is very strong and clear. The licensee, in this case the Indian consortium, at its election has the right to take a 30 per cent in the development project no matter who executes it,” the first official said.
OVL, the overseas investment arm of India’s state-owned Oil and Natural Gas Corp (ONGC), holds a 40 per cent stake in the 3,500 square kilometre Farsi offshore exploration block in the Persian Gulf Iran. Indian Oil Corp (IOC) holds 40 per cent stake while the remaining 20 per cent is with Oil India Ltd (OIL).
The Exploration Service Contract (ESC) for the Block was signed in December 2002 and OVL in 2008 made a big discovery on the block which was rechristened as Farzad-B.
The field holds 23 trillion cubic feet of in-place gas reserves, of which about 60 per cent can be recovered.
In April 2011, the Indian consortium submitted a Master Development Plan of Farzad-B gas field to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for developing Farzad-B gas field.
A Development Service Contract of the Farzad-B gas field was negotiated till November 2012 but could not be given a final shape due to international sanctions on Iran.
In April 2015, negotiations resumed with the Iranian authorities to develop the Farzad-B gas field under a new Iran Petroleum Contract. This time, NIOC introduced Pars Oil and Gas Company as its representative for negotiations.
From April 2016, both India and Iran negotiated to develop the Farzad-B gas field under an integrated contract but the talks remained inconclusive.
The same year, Iran said it was examining the Indian proposal but that an agreement was unlikely because Iran’s demanded gas price differed with India’s offer.
