Iran Offers ONGC Videsh, Partners 30% Stake In Farzad-B Gas Field

Iran has offered ONGC Videsh Ltd. and its partners a30% stake in the development of the Farzad-B gas field in the Persian Gulf that was discovered by the Indian consortium, officials said.

ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corp. Ltd., had in 2008 discovered a gas field in the 3,500 sq. km Farsi offshore block. In April 2011, it submitted a master development plan to bring the discovery into production but negotiations stalled after sanctions were slapped on Iran over its nuclear plans. Negotiations restarted in 2015, but in February 2020, National Iranian Oil Co. said the Iranian government has decided to award the contract to develop the field to a local firm.

The exploration contract, under which ONGC Videsh and its partners had discovered gas reserves in Farsi block, provided for the discoverer to be part of the field development, the officials said.

Citing the Exploration Service Contract, Iran asked the Indian consortium to exercise its rights to participate in the development contract up to 30%, they said, adding that Tehran asked the Indian firms to exercise the right within 90 days failing which it would be deemed as rejection of the offer.

Officials said for further discussion to participate in the development contract, communications and comments on Confidentiality Agreement were sent to NIOC in March and a reminder in the following month.

However, NIOC has not responded to that, they said.

ONGC Videsh holds a 40% stake in the 3,500 sq. km Farsi offshore block in the Persian Gulf. Indian Oil Corp. Ltd. holds 40% stake and the remaining 20% is with Oil India Ltd. The Exploration Service Contract for the block was signed on Dec. 25, 2002, and OVL in 2008 made a giant discovery on the block, which was later rechristened as Farzad-B.

The field holds 23 trillion cubic feet of in-place gas reserves, of which about 60 % is recoverable. It also holds gas condensates of about 5,000 barrels per billion cubic feet of gas.

The Indian consortium has so far invested around $85 million in the block. The contract provides for the Indian consortium being paid back the expense together with a fixed rate of return.