Iran: Oil at $60 good, positive outlook on India gas deal

India’s Economic Times daily said OVL felt it could lower the development investment to under $4 billion from $6.2 billion proposed before. Also, the company will no longer set up the LNG plant on which it had proposed to invest $5 billion.

According to the paper, what remains to be ironed out is the rate of return. Iran is offering 15 percent return on the investment made but the Indians have only 5-6 percent in mind, it said.

The Farzad B field is estimated to hold 22 trillion cubic feet (tcf) of reserves, of which 16 tcf are deemed recoverable.

The differences degenerated into an open row last year when India directed its state refiners to cut oil imports from Iran because of Tehran’s refusal to submit to New Delhi’s demands.

Iran shrugged off the move and sought other investors for the field, with media reports suggesting Tehran would award it to Russia’s Gazprom.

The two sides appeared to have found a middle ground in February when President Hassan Rouhani visited New Delhi.

India’s Oil Minister Dharmendra Pradhan said then after meeting with Zanganeh that Indian refiners had agreed to boost oil imports from Iran. Reports also said Iran had offered a higher freight discount on oil sales, besides agreeing to consider India’s demand for a stake in Farzad B.

Reuters cited unnamed sources as saying last week that Indian state refiners planned to almost double oil imports from Iran in 2018/19, drawn by incentives offered by Tehran.

State refiners Indian Oil Corp, Mangalore Refinery and Petrochemicals Ltd, Bharat Petroleum and Hindustan Petroleum plan to import 396,000 barrels per day (bpd) of Iranian oil in the current fiscal year, to March 2019, it said.

The refiners imported about 205,600 bpd of Iranian oil in the previous fiscal year, according to the news agency.