Iran promises to give India licence to develop ONGC gas field

NEW DELHI(PTI):Iran has promised to give India the licence to develop ONGC-discovered Farzad-B gas field in the Persian Gulf but pricing of gas is stalling the award.

While Iran previously wanted to have marketing rights of the gas for internal consumption and so was desiring to price it at low rates, it now wants the developers to market it and so is seeking a higher rate.

“Iran has in-principle agreed to give the field to India on nomination basis. Right now price is being discussed,” Oil Minister Dharmendra Pradhan told reporters.

The price has to be right to give Indian firms investing in the development of the field, a healthy rate of return on the money spent. It also has to be right for the owner of the natural resources, that is, Iran, he said.

“We have an October deadline to finalise a contract and are hopeful to do so within the deadline,” he said.

A consortium of ONGC Videsh Ltd (the overseas arm of Oil and Natural Gas Corp), Oil India Ltd and Indian Oil Corp had discovered the 12.8 trillion cubic feet of gas reserves in the Farsi block in 2008.

The consortium has submitted a development plan for the Farzad-B field with options to evacuate the gas either in form of LNG or through a sub-sea pipeline.

Indian firms had so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe. But with the lifting of the sanctions, they are now eager to take up the development.

OVL in August/September 2010 submitted a revised Master Development Plan (MDP) for producing 60 per cent of the 21.68 trillion cubic feet of in-place gas reserves but had not signed the contract because of threat of being sanctioned by the US which is against any company investing more than USD 20 million in Iran’s energy sector in any 12-month period.

They submitted a revised plan last year after including a plant to liquify the gas to convert it into LNG for ease of transporting by ships. An option of transporting it via sub-sea pipeline has also been submitted.

“We can bring gas from Iran to India via both options. It demands on techno-economic viability,” Pradhan said.

OVL and IOC hold 40% interest each in Farsi block, while the remaining 20 per cent is with OIL.