India Set to Lose Farzad-B Gas Field in Persian Gulf as Iran Picks Local Firm Over ONGC Videsh Ltd

Must Read

India has lost all but the NGOC Videsh Ltd-discovered Farzad-B gas field in the Persian Gulf after Iran decided to prefer domestic companies to foreign companies for field production, sources said. The NGOC Videsh Ltd (OVL), the overseas investment arm of the state-owned Oil and Natural Gas Corp (ONGC), discovered a giant gas field in the Farsi offshore discovery block in 2008.

OVL and its collaborators proposed to invest up to USD 11 billion in the creation of the discovery, which was later named Farzad-B. After sitting on OVL ‘s proposal for years, the National Iranian Oil Co (NIOC) told the firm in February this year of its intention to conclude a contract for the production of Farzad-B with an Iranian corporation, sources with direct knowledge of developments said.

However, OVL continued its commitments to NIOC on the growth of the field and sought the terms and conditions of the proposed contract for its assessment, they added, adding that Iran has not yet replied to the request of the Indian company. Farzad-B has a cumulative inventory of about 21,7 trillion cubic feet, of which about 60 percent is recoverable, and production is estimated to be around 1,1 billion cubic feet per day.

Sources said unconfirmed information suggests that Iran has identified a local field development firm, but OVL has not yet given up hopes and continues to pursue the contract with the Iranian authorities. The 3,500 square kilometer block of Farsi is located at a depth of 20-90 meters on the Iranian side of the Persian Gulf.

OVL, with a 40% operator stake, signed an Exploration Service Contract (ESC) for the block on 25 December 2002. Other partners included Indian Oil Corp (IOC) with a 40% stake and Oil India Ltd (OIL) with a 20% stake remaining. OVL found gas in a block deemed commercially viable by NIOC on 18 August 2008. The exploration phase of the ESC expired on 24 June 2009.

In April 2011, the firm sent a Master Development Plan (MDP) for the Farzad-B gas field to the Iranian Offshore Oil Company (IOOC), the then designated NIOC authority for the development of Farzad-B gas field. The Farzad-B Gas Field Production Service Contract (DSC) was signed until November 2012, but could not be finalized due to difficult conditions and international sanctions against Iran.

In April 2015, talks with the Iranian authorities resumed on the production of the Farzad-B gas field under the new Iran Petroleum Contract (IPC). This time, NIOC added the Pars Oil and Gas Company (POGC) as its bargaining agent. From April 2016, both parties negotiated the development of the Farzad-B gas field under an integrated contract covering upstream and downstream, including the monetization/marketing of the processed gas. The negotiations remained, however, inconclusive.

Meanwhile, on the basis of new studies, a revised Provisional Master Development Plan (PMDP) was sent to POGC in March 2017, sources said, adding that in April 2019, NIOC suggested the development of the DSC gas field and the NIOC offtake of raw gas at the landfall point. However, owing to the imposition of US sanctions on Iran in November 2018, technical studies, which are a prerequisite to trade talks, could not be concluded.

Latest News

Constantine 2 : Release Date , Cast & Plot Details!!

The American superhero horror film “Constantine” is coming back with its sequel. Directed by Francis Lawrence, the film is...