ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned ONGC, had in 2008 discovered a giant gas field in the Farsi offshore exploration block. OVL and its partners had offered to invest up to $11 billion for development of the discovery, which was later named Farzad-B.
After sitting over OVL's proposal for years, the Iranian NIOC informed the firm in February this year about its intention to conclude the contract for Farzad-B development with an Iranian company, sources with direct knowledge of the development said.
OVL, however, continued its engagements with NIOC over the development of the field and sought terms and conditions of the proposed contract for its evaluation, they said, adding that Iran has so far not responded to the Indian firm's request.
Sources said unconfirmed information suggests that Iran has identified a local firm for the development of the field, but OVL has not yet given up hopes and continues to chase Iran´s authorities for the contract.
OVL discovered gas in the block, which was declared commercially viable by NIOC in 2008. The exploration phase of the ESC expired in 2009. The firm submitted a Master Development Plan of Farzad-B gas field in 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for development of Farzad-B gas field.
A Development Service Contract of Farzad-B gas field was negotiated till 2012, but could not be finalized due to difficult terms and international sanctions on Iran. In 2015, negotiations restarted with Iranian authorities to develop Farzad-B gas field under a new Iran Petroleum Contract. This time, NIOC introduced Pars Oil and Gas Company as its representative for negotiations.
From 2016, both sides negotiated to develop Farzad-B gas field under an integrated contract covering upstream and downstream, including monetization/marketing of the processed gas. However, negotiations remained inconclusive.
Meanwhile, on the basis of a new studies, a revised Provisional Master Development Plan was submitted to POGC in 2017, sources said, adding that in 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by NIOC at landfall point.
However, due to imposition of US sanctions on Iran in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations. The Indian consortium has so far invested around $400 million in the block.
