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ONGC scouts for gas fields elsewhere after Iran talks tough on Farzad B

ONGC Videsh is targeting production of 60 million tonnes of oil and gas by 2030

Reuters  |  New Delhi 

Funding may be a mix of borrowing and stake sale

India's has turned its focus to buying stakes in overseas and assets to meet output targets after a delay by in awarding development rights for a field, its managing director said on Thursday.

Indian firms led by ONGC Videsh, the foreign investment arm of and Natural Corp, have been negotiating with for development rights of B field since its discovery in 2008.

"We have been extremely flexible in our dealings with and hoped that 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.

is targeting production of 60 million tonnes of and by 2030 from 12.80 million tonnes in 2016/17. Verma listed Africa, Central Asia and Latin America as preferred regions for acquiring producing assets.

India was hoping to get rights to develop 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, 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 asked us to include downstream so we revised and raised our bid to $11 billion and linked prices to international benchmarks," he said. ONGC had previously submitted a $5 billion deal.

has modified its petroleum contract model, ending a decades-old buy-back system that barred foreign firms from booking reserves or taking equity stakes.

Under new terms wants India to operate the field for 20 years and commit to buying for 25 years at prices higher than those proposed by ONGC, he said.

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.

The B field lies on the border of and Saudi Arabia, which has already begun production from its side of the project called Hisbah.

India, the world's third-biggest consumer, has told state firms to acquire assets overseas to improve energy security. India imports about 80 per cent of its crude needs.

"We are still keen to develop the fields if offers us good returns as our main aim is to book reserves for our country," Verma said.

First Published: Thu, November 02 2017. 18:20 IST
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