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India's ONGC Videsh has turned its focus to buying stakes in overseas oil and gas assets to meet output targets after a delay by Iran in awarding development rights for a gas field, its managing director said on Thursday.
"We have been extremely flexible in our dealings with Iran and hoped that Farzad will add to our output target but the deal is not yet finalised. In the meantime, we are looking for producing assets elsewhere to boost our output," NK Verma told Reuters.
Verma listed Africa, Central Asia and Latin America as preferred regions for acquiring producing assets.
India was hoping to get rights to develop Farzad B as the South Asian nation was one of the handful countries that continued to deal with Tehran despite sanctions.
But since the end of some sanctions last year, Iran has sought other investors and media reports suggest that Tehran has agreed to award the field to Russia's Gazprom.
Verma said India modified its bid several times to match Tehran's expectations and terms to get the development rights.
"We wanted to do only upstream but Iran asked us to include downstream so we revised and raised our bid to $11 billion and linked gas prices to international benchmarks," he said. ONGC had previously submitted a $5 billion deal.
Iran has modified its petroleum contract model, ending a decades-old buy-back system that barred foreign firms from booking reserves or taking equity stakes.
Iran's previous contracts gave investors an assured return of 18 percent.
"Our calculations show that under new rules we would be getting returns in low single digit and do not justify taking investment and production risk," Verma said.
"We are still keen to develop the fields if Iran offers us good returns as our main aim is to book reserves for our country," Verma said.