The state-owned ONGC Videsh Ltd (OVL) has lost its development and operating rights in Iran's Farzad-B giant gas field to Iranian Petropars Group.
The OVL, which is the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), owns 40 percent participating interest (PI) in the block.
Farzad-B gas field's discoveryAn ONGC-led consortium had first discovered the giant gas field in the Farsi offshore exploration block in 2008. It was later named Farzad-B. The other partners in its consortium included Indian Oil Corporation and Oil India. The ONGC consortium had offered to put in investment up to USD 11 billion for the development of the gas field. |
Key Highlights
•The Indian consortium had so far invested around USD 400 million in the gas block.
•However, issues in negotiations between OVL and Iranian authorities as well as US sanctions led to the failure of multiple negotiations between the company and Iranian regulators to finalise a development plan.
•Ultimately, India lost the operating rights of the gas field after Iran awarded the contract to develop the giant gas field to a local company.
•The National Iranian Oil Company (NIOC) signed a contract worth $1.78 billion with Petropars Group for the development of Farzad B Gas Field in the Persian Gulf.
•The deal was signed in Tehran on May 17, 2021 in the presence of the Iranian Minister of Petroleum Bijan Zangeneh.
•The contract envisages daily production of about 28 million cubic meters of sour gas in the next five years.
Farzad-B gas field: Significance•The Farzad-B gas field comprises 23 trillion cubic feet of in-place gas reserves, out of which 60 percent is estimated to be recoverable. •The gas field also holds gas condensates of about 5,000 barrels per billion cubic feet of gas. •The 3,500 sqkm Farsi block sits in a water depth of 20-90 metres on the Iranian side of the Persian Gulf. |
Why has OVL lost its operating rights in the Farzad-B gas field? Everything you need to know- Full Timeline
•OVL, which had 40 percent operatorship interest, had signed the Exploration Service Contract (ESC) for the gas block on December 25, 2002. The other partners of OVL- Indian Oil Corp (IOC) holds 40 percent Participating Interest, while Oil India holds the remaining 20 percent Participating Interest.
•The OVL had first discovered gas in the block, which was declared commercially viable by NIOC on August 18, 2008. The exploration phase expired on June 24, 2009.
•The OVL had submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for the development of the gas field.
•Though a Development Service Contract (DSC) was negotiated till November 2012, but it could not be finalized due to difficult terms and international sanctions on Iran.
•The negotiations began again with the Iranian authorities in April 2015 under a new Iran Petroleum Contract (IPC). Pars Oil and Gas Company (POGC) was introduced as NIOC's representative for negotiations this time.
•In April 2016, the two sides negotiated to develop the Farzad-B gas field under an integrated contract. The contract covered both upstream and downstream as well as monetization and marketing of the processed gas. The negotiations though remained inconclusive.
•The NIOC informed OVL on October 18, 2020 of its intention to award the contract for Farzad-B's development with an Iranian company, after sitting over OVL's proposal for years.
Background
India had previously on several occasions emphasized on the need for early completion of all necessary procedures for India’s participation in the Farzad-B field. India had also expressed its desire to participate in other oil and gas explorations in Iran as well.
Comments
All Comments (0)
Join the conversation