India has all but lost the ONGC Videsh discovered Farzad-B gas field in the Persian Gulf. This is following Iran’s decision to prefer domestic companies over foreign firms for development of the field, according to sources. ONGC Videsh Ltd (OVL) 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 discovery, which was later named Farzad-B. After sitting over OVL’s for some time, National Iranian Oil Co (NIOC) decided to move forward with an Iranian company. OVL, however, continued its engagements with NIOC over development of field. Moreover, it sought terms and conditions of the proposed contract for its evaluation. But they have not responded to OVL’s request as yet.
Farzad-B holds around 21.7 trillion cubic feet reserves. Out of these, 60% is recoverable and production is slated to be around 1.1 billion cubic feet per day. According to some Iran has identified a local firm for the development of the field, but OVL has not yet given up and continues to chase Iranian authorities. The 3,500 square kilometre Farsi block sits in water depth of 20-90 metres on Iranian side of the Persian Gulf. Having 40% operatorship interest OVL signed the Exploration Service Contract (ESC) for the block in December 2002. Other partners included Indian Oil Corp (IOC) with 40% stake and Oil India Ltd (OIL) holding the remaining 20% stake.
OVL discovered gas in the block, was declared commercially viable by NIOC, in August 2008. The exploration phase of the ESC expired on June 24, 2009. The firm 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 development of Farzad-B gas field. Development Service Contract (DSC) of Farzad-B gas field was negotiated till November 2012, but could not be finalized. In April 2015, negotiations restarted with Iranian authorities under a new Iran Petroleum Contract (IPC). This time, NIOC introduced Pars Oil and Gas Company (POGC) as its representative for negotiations.
From April 2016, both sides negotiated to develop Farzad-B gas field under an integrated contract covering upstream and downstream, including marketing of the processed gas. But talks remained inconclusive. Meanwhile, on basis of new studies, a revised Provisional Master Development Plan (PMDP) was submitted to POGC in March 2017. In April 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by NIOC at landfall point. 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.
