OVL SUB­MITS $10-BN PRO­POSAL TO IRAN FOR FARZAD-B GAS FIELD

Resource Digest - - MINING -

ONGC Videsh Ltd, the over­seas arm of state-owned Oil and Nat­u­ral Gas Corp, has sub­mit­ted a $10 bil­lion in­te­grated pro­posal to Iran for de­vel­op­ing the Farzad-B gas field in the Per­sian Gulf and ship­ping the gas to In­dia.

A con­sor­tium of OVL, Oil In­dia Ltd and In­dian Oil Corp had dis­cov­ered the 12.8 tril­lion cu­bic feet of gas re­serves in the Farsi block in 2008. The dis­cov­ery was named Farzad-B.

“In April, we met in Iran and as per dis­cus­sions, we have worked out a fully in­te­grated pro­posal and sub­mit­ted to Ira­nian au­thor­i­ties,” OVL Man­ag­ing Di­rec­tor Naren­dra K Verma told re­porters.

Iran, he said, had asked for a plan for de­vel­op­ing the field as well as op­tions for tak­ing the gas. “Fully in­te­grated pro­posal with lots of op­tions has been sub­mit­ted,” he said, adding that OVL has in­vited Ira­nian of­fi­cials to In­dia for dis­cus­sions on the pro­posal. Gas pro­duced from the field can ei­ther be con­verted into LNG by freez­ing at sub-zero tem­per­a­ture and ship­ping in cryo­genic ships to In­dia or trans­ported through a pipe­line ei­ther over­land pass­ing through Pak­istan or sub-sea.

Iran and six world pow­ers in July sealed an ac­cord to curb the Is­lamic Repub­lic’s nu­clear pro­gramme in re­turn for end­ing sanc­tions, open­ing prospects of In­dian in­vest­ments in the Per­sian Gulf field. In­dian firms had so far shied away from in­vest­ing in Iran for the fear of be­ing sanc­tioned by the US and Europe. OVL in Au­gust/Septem­ber 2010 sub­mit­ted a re­vised Mas­ter De­vel­op­ment Plan (MDP) for pro­duc­ing 60 per cent of the 21.68 tril­lion cu­bic feet of in-place gas re­serves but had not signed the con­tract be­cause of threat of be­ing sanc­tioned by the US which is against any com­pany in­vest­ing more than $20 mil­lion in Iran’s en­ergy sec­tor in any 12-month pe­riod.

Iran, in Fe­bru­ary 2012, is­sued a one-month ul­ti­ma­tum to the OVL-led con­sor­tium over the de­vel­op­ment of a gas field. For more than two years, it did not carry out the threat of can­celling al­lo­ca­tion of the Farsi block to OVL. To pres­surise In­dia to act, Tehran last year put the field on the list of blocks it wants to auc­tion in fu­ture. It has, how­ever, not yet can­celled OVL’s ex­plo­ration li­cence for the Farsi block which gives it the right to de­velop the dis­cov­er­ies it has made. Verma said since In­dian com­pa­nies had made the dis­cov­ery, they nat­u­rally had the first right to de­velop them. “They had asked for a de­vel­op­ment plan and as also a plan on how the gas pro­duced is to be used... we have sub­mit­ted an in­te­grated pro­posal to them,” he added.

Iran, he said, has given a draft con­trac­tual regime un­der which In­dian firms have to op­er­ated. OVL and IOC hold 40 per cent in­ter­est each in Farsi block, while the re­main­ing 20 per cent is with OIL.

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