- The giant gas field was discovered in 2008 in the Farsi offshore exploration block by ONGC Videsh Ltd (OVL), an investment firm owned by India
(Karachi) In a major blow, India has lost Farzad-B gas field contract in the Persian Gulf after Iran decided to prefer domestic companies over foreign firms for development of the field, local media has reported.
The giant gas field was discovered in 2008 in the Farsi offshore exploration block by ONGC Videsh Ltd (OVL), an investment firm owned by India.
As part of the agreement between the Indian firm and Iran government, OVL and its partners intended to invest up to $11 billion for development of the discovery which was later named Farzad-B.
However, after considering the OVL's proposal for years, the National Iranian Oil Co (NIOC) informed the firm in February 2020 that it intends to end the contract for Farzad-B development.
Meanwhile, OVL continued efforts to negotiate with the NIOC over the development of the field and sought terms and conditions of the proposed contract for its evaluation. The NIOC is yet to respond to the Indian firm's request.
India continues to chase contract
As per an estimate, Farzad-B holds total reserves of around 21.7 trillion cubic feet of which around 60 percent is recoverable, and production is slated to be around 1.1 billion cubic feet per day.
For the mega project, Iran has identified a local firm for its development but OVL has not yet given up hopes and continues to chase Iranian authorities for the contract. The 3,500 square kilometre Farsi block sits in water depth of 20-90 metres on the Iranian side of the Persian Gulf.
OVL inked the exploration contract with 40 percent operatorship interest for the block on December 25, 2002. Other partners included Indian Oil Corp (IOC) with 40 percent stake and Oil India Ltd (OIL) holding the remaining 20 percent stake. The gas field was discovered by OVL which was declared commercially viable by NIOC, on August 18, 2008. The exploration phase of the exploration contract 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. A Development Service Contract (DSC) of Farzad-B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions on Iran.