Iran offers ONGC Videsh 30% stake in Farzad-B gas field

26 Sep 2022 , 06:50 AM

According to news reports, Iran has offered ONGC Videsh Ltd. and its partners a 30% stake in developing the Farzad-B gas field, which the Indian consortium discovered in the Persian Gulf.

In the 3,500 square kilometers Farsi offshore block, ONGC Videsh Ltd made the discovery of a massive gas field in 2008. ONGC Videsh is the foreign branch of the state-owned Oil and Natural Gas Corporation (ONGC),

It submitted a master development plan (MDP) in April 2011 to bring the finding, known as Farzad-B, into production, but talks stopped as a result of international sanctions placed on Iran because of its nuclear ambitions.

The negotiations were resumed in 2015, but the National Iranian Oil Company (NIOC) announced in February 2020 that the Iranian government has opted to grant the contract to a local company to develop the field.

According to the reports, the exploration contract that allowed OVL and its partners to find gas reserves in the Farsi block stipulated that the discoverer would participate in field development.

According to them, Iran requested the Indian consortium exercise its rights to participate in the development contract up to a minimum 30% stake, citing the Exploration Service Contract. Tehran also requested the Indian firms to exercise their rights within 90 days of receiving the request, failing which it would be viewed as a rejection of the request.

Reports stated that messages and comments on the Confidentiality Agreement (CA) were given to NIOC in March, followed by a reminder the following month, for additional discussion to participate in the development contract.

In 2008, OVL discovered a significant discovery on the block, which was afterward renamed Farzad-B. The Exploration Service Contract (ESC) for the Block was signed on December 25, 2002.

There are 23 trillion cubic feet of in-place gas reserves in the field, of which 60% can be recovered. Approximately 5,000 barrels of gas condensate per billion cubic feet of gas are also stored there.

The Iranian Offshore Oil Company (IOOC), which was at the time the designated authority by NIOC for the development of the Farzad-B gas field, received a Master Development Plan (MDP) of the Farzad-B gas field from the Indian consortium in April 2011.

NIOC said in February 2020 that it intended to work with an Iranian company to complete the Farzad-B development contract. It informed the Indian consortium of the signing of the development agreement with Petropars, a local Iranian company, in March 2021.

Up to this point, the Indian consortium has contributed about $85 million to the block. The contract stipulates that the expense will be reimbursed to the Indian consortium along with a set rate of return.

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