Iran dumps India, awards Farzad-B gas field contract to local firm

(Karachi) In a major setback to India, Iran has awarded the Farzad-B gas field contract to a domestic gas producer, Petropars, local media reported on Thursday.

As per details, 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 on May 17, in a ceremony held in the presence of Iranian Minister of Petroleum Bijan Zangeneh in Tehran.

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. The 3,500 square kilometre Farsi block sits in water depth of 20-90 metres on the Iranian side of the Persian Gulf.

Earlier, 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 NIOC informed the firm in February 2020 that it intends to end the contract for Farzad-B development.

India continued to chase contract

For the mega project, Iran identified a local firm for its development but OVL did not gave up hopes and continued to chase Iranian authorities for the contract.

OVL negotiated with the NIOC over the development of the field and sought terms and conditions of the proposed contract for its evaluation.

The backdrop

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.