India may continue to pursue investment chance in the Farzad-B gas field in Iran, even though ONGC Videsh Ltd (OVL) lost the development rights of the block that it found over a decade ago to local company Petropars Group, highly placed government sources told by a report.
Reports from Iran indicate that months the after ejecting India from the ambitious $1.8 billion project, Tehrann has now brought in Petropars Group to advance the gas field in the Persian Gulf.
But the sources added that this would not deter the Indian entity from pursuing energy assets in the country and remain invested in the project. In fact, they indicated that Iran may formally proclaim a partnership with the Indian firm once development work of the field picks up pace.
Sources in the Oil Ministry said that Indian consortium including IndianOil, Oil India and OVL, which took the exploration contract for Farzad-B in 2002, may remained invested in the upstream project as equity partners with other homegrown and international entities even without operatorship or development rights.
They are in discussions with Iranian authorities in this regard to formalize the arrangement that gets India a share in gas fields output, they told.
If this option is acceptable, it would allow the consortium to get their share of gas to India at applicable rates decided by Iran.
Though the exploration contract inked by the
Indian consortium expired in 2009, the sources said that a deal could be negotiated so that India has a presence in the field as equity investors.
Initial indications Iran also favour this arrangement, they said.
Farzad-B, which was found by OVL in the Farsi block about 10 years ago, had an in-place gas reserve of 21.7 trillion cubic feet, of which 12.5 Tcf is believed to be recoverable. If India gets a share of this gas, it could decrease its dependence on expensive LNG.
Iran had been dilly dallying over endowment of development right of Farzad-B for few years now.
Things had come to a standstill since the US imposed sanctions in 2018 on Iran with India also stirring slowly on the matter. This pushed Iran into telling that India was not serious about investing the project and decided to bid operatorship of the gas block to a local company.
The sources claimed that changes in geo-political scenario in the Covid-19 world, which suggests that Tehran may soon be out from US sanctions favour more active participation of India in Iranian energy assets.
If Iran agrees to offer equity holding in the project, Indian consortium claims would once again be considered.
"There are two issues to Farzad-B project. Iran not giving development rights to OVL but an Indian consortium continues to have part ownership of the block and would get its share of profit whosoever develops the project," the sources stated.
The OVL-led consortium have invested near to $100 million in the project.
India and Iran were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually decided to push the timeline to February 2017.
The deadline to wind up negotiations was later targeted for September 2017. But, with deal stuck over pricing of gas. Sanctions delayed the process afterward and despite visits of ministers from both sides no agreement could be accomplished. OVL pushed for the deal with a sweetened bid that included investment of close to $11 billion.
But that also did not break the ice and the project remains in midpoint.
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