A consortium of Indian companies led by ONGC Videsh Ltd. (OVL), a division of multinational oil and gas company Oil and Natural Gas Corporation Limited (ONGC), has offered Iran up to US$11 billion to develop the Farzad-B 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 Narendra Kumar Verma, OVL managing director.
OVL has offered to invest as much as US$6 billion on the Farzad-B field and spend the remaining amount to build a liquefied natural gas export facility, 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.
As India, the world’s fourth-largest LNG buyer, seeks to lock up gas resources to meet growing demand and spur the use of cleaner-burning fuels, Iran is emerging from sanctions that stifled investment in its energy sector. The Persian Gulf nation plans to sign a formal contract with Total SA and China National Petroleum Corp. to develop its share of the offshore South Pars project, the world’s biggest natural gas field.
Officials from Iran’s Ministry of Petroleum and the National Iranian Oil Co. were unable to comment on Farzad-B.
The two countries had aimed to conclude a deal by February on developing the field, which India has said holds reserves of almost 19 trillion cubic feet. 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.
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, according to a Bloomberg report in April.
The South Asian nation is promoting the cleaner-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.
OVL and Indian Oil each own 40% interest in the Farsi block that holds Farzad-B field, while Oil India has 20%.