ONGC Videsh (OVL) has sought from Iran details of the Farzad-B field development contract so that it can decide on its participation in the project. ONGC Videsh-led Indian consortium, which discovered the Farzad-B gas field in the Persian Gulf in 2008, has the right to take a minimum of 30% stake in the project.
The giant gas field has remained undeveloped for more than a decade primarily due to the US sanctions on Iran that have choked investment plans. Iran, too, has been slow to use the small windows of sanctions-free years to expedite development plans. It negotiated with the Indian consortium for years until sanctions cut off possibilities of investments.
In May, Iran awarded the field development rights to Petropars, an Iranian exploration and production company. This, however, does not dilute the rights of OVL and its partners to have a minimum 30% participating interest in the Farzad-B project as provided in the original exploration contract.
But OVL, the overseas arm of state-run explorer Oil and Natural Gas Corporation, needs to know more about the terms and conditions of the contract awarded to Petropars to make up its mind on its future involvement in the project. “We have sought signed development contract details from Iran so that we can take an informed decision on our participation in the gas field development project,” ONGC Videsh managing director Alok K Gupta told ET.
will be able to invest in the Iranian project only after the US sanctions are lifted as payment channels are currently blocked. Sanctions bring big project execution and finance risks as they make it extremely difficult to access project finance as well as oilfield services that are mostly controlled by American companies.
The reimposition of US sanctions three years ago had driven away French firm Total from a massive gas field development project in Iran.
The Islamic Republic, too, has been slow in freezing a development plan for Farzad-B and has attempted to negotiate with more than one player in the past. It also discussed bringing Russians into the project. Iran and the Indian consortium have discussed many variants of the investment plans and disagreed on the gas price for the project as well as the returns the project developer could expect.
The various development plans the ONGC-led consortium submitted to Iran varied in investments from $3 billion to $11 billion.
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