What has happened?
Iran has offered ONGC Videsh Ltd and its partners a 30% Interest in development of the Farzad-B Gulf that was discovered by the Indian consortium, officials said.
When was the Farzad-B Gas Field discovered?
ONGC Videsh Ltd (OVL), the overseas investment arm ONGC, had in 2008 discovered a giant gas field in the Farsi offshore exploration block.
On December 25, 2002, OVL and the other 40% operatorship interest signed the Exploration Service Contract (ESC) for the block. Other partners included IOC with 40% stake and OIL holding the remaining 20% stake.
On August 18, 2008, OVL found gas in the block, which National Iranian Oil Co. (NIOC) deemed commercially viable.
The ESC’s exploratory phase came to an end on June 24th, 2009. Up to $ 11 billion had been offered by OVL as well as its partners to support the exploration of the discovery.
Proposal for the development of gas field
In April 2011, the company provided Iranian Offshore Oil Company (IOOC), which was at the time the appointed entity by NIOC for development of the Farzad-B gas field, with a Master Development Plan (MDP) of the Farzad-B gas field.
A Development Service Contract (DSC) of Farzad-B gas field was negotiated till November 2012, but could not be finalised due to difficult terms and international sanctions on Iran.
Negotiations to develop the Farzad-B gas field underneath a renewed Iran Petroleum Contract were resumed in April 2015. (IPC).
This time, NIOC introduced POGC as its negotiator as Pars Oil and Gas Company (POGC).
From April 2016, the parties engaged in negotiations to develop the Farzad-B gas field under such a unified agreement that would cover both the upstream and downstream processes, as well as the monetization and sale of the processed gas. However, negotiations remained inconclusive.
India not Happy
Miffed by the delay, New Delhi had asked its refiners to reduce oil imports from Iran by fifth. India was then Iran’s main oil buyer and had obtained a waiver from Barack Obama administration.
Teheran hit back by reducing the payment window from Indian refiners from 90 days to 60 and cut the discount on ocean freight from 80% to 60%.
Meanwhile, a revised Provisional Master Development Plan (PMDP) was presented to POGC in March 2017 based on fresh investigations.
However, technical investigations that are a requirement for commercial negotiations could not be completed after the implementation of US sanctions against Iran in November 2018.
The National Iranian Oil Company (NIOC) informed the company in February 2020 that it intended to execute the contract for the development of Farzad-B with an Iranian company after mulling over OVL’s proposal for years.
OVL, on the other hand, continued its interaction with NIOC about the development of the field and requested the proposed contract’s terms and conditions for review.
Iran, on the other hand, has yet to react to the Indian firm’s request.
How much Indian Consortium has invested?
Up to this point, the Indian consortium has contributed about $400 million to the block.
CAPACITY OF FARZAD-B GAS FIELD
The 3,500 square kilometre Farsi block sits in water depth 20-90 metres on the Iranian side of the Persian Gulf.
Farzad-B holds total reserves of around 21.7 trillion cubic feet of which around 60% is recoverable. Production is slated to be around 1.1 billion cubic feet per day.