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Farzad-B field holds reserves of almost 538 bcm.
Farzad-B field holds reserves of almost 538 bcm.

India Submits $11b Offer for Farzad-B Gas Project

India Submits $11b Offer for Farzad-B Gas Project

An Indian consortium is willing to spend as much as $11 billion to develop a giant Iranian natural gas field and build the infrastructure to export the fuel as long as the Persian Gulf nation guarantees a “reasonable return” on the project, according to the company leading the group.
"ONGC Videsh Ltd. has offered to invest as much as $6 billion on the Farzad-B field and spend the rest to build a liquefied natural gas export facility," Narendra Kumar Verma, managing director of the overseas investment unit of India’s largest explorer, Oil & Natural Gas Corp, told Bloomberg.
Verma said the group is seeking a return of about 18% and Indian companies are willing to buy all the gas exported from the project.
“We have given our best offer to them. Now, it is up to them to agree or not agree,” Verma said in a phone interview. “We have told the Iranian authorities very clearly that some basic returns are necessary.”
As India, the world’s fourth-largest LNG buyer, seeks to lock up gas resources to meet growing demand and spur the use of clean-burning fuels, Iran is emerging from sanctions that stifled investment in its energy sector.
Officials from Iran’s Oil Ministry and the National Iranian Oil Company were unable to comment Sunday on Farzad-B.
Iranian Deputy Oil Minister Amirhossein Zamaninia said last month discussions with the Indian side on Farzad-B were continuing and have “very much advanced”.
Iran was also in discussions with Russia’s Gazprom PJSC on the Farzad fields, he added.
The two countries had aimed to conclude a deal by February on developing the field, which India says holds reserves of almost 538 billion cubic meters, of which 370 billion cubic meters are deemed recoverable.
The consortium, which includes Indian Oil Corp. and Oil India Ltd., has been trying to secure development rights to the Farzad-B gas field since at least 2009.

----- Delay Damage
The delay over a final outcome has started hurting oil trade between the two countries.
India, which bought Iranian crude even during the years of US-led sanctions against Tehran, has recently reduced purchases, leading to the withdrawal by Iran of some benefits on sales in retaliation.
“We are ready to invest,” Verma said. “Ultimately, that’s positive for them.”
The South Asian nation is promoting the clean-burning fuel to curb the use of more polluting alternatives such as coal and petroleum coke, an oil-refining byproduct, to meet its pledge of slashing emissions by a third by 2030.
ONGC Videsh and Indian Oil each own 40% interest in the Farsi block that holds Farzad-B field, while Oil India has 20%.

 

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