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ONGC Videsh hasn't heard from Iran on $11 bn offer for Farzad-B gas field

OVL has offered to invest about $5.8 billion in developing the Farzad-B gas field

Press Trust of India  |  New Delhi 

Funding may be a mix of borrowing and stake sale
Farzad B was discovered by OVL in the Farsi block about 10 years ago

Videsh Ltd, the overseas arm of state-owned and Natural Gas Corp (ONGC), today said it hasn't heard from on the $11 billion 'best offer' it gave for developing the Farzad-B gas field.

"We are ready to invest provided we get reasonable returns," Managing Director K Verma told reporters here.

has offered to invest about $5.8 billion in developing the Farzad-B gas field and another $5 billion to build a liquefied natural gas export facility, he said.

wants a high price of the natural gas, making the investment practically unviable.

"We will get the project the day we accept their conditions. But for me to go ahead and make such investments, it has to bring reasonable returns and making economic sense," he said without elaborating.

had earlier this year signed an initial pact with Russia's Gazprom for developing the OVL-discovered gas field of Farzad B but has kept the door open for awarding it to the Indian firm.

"We have given them our best offer. Now, it is up to them to agree or not agree," Verma said.

With Tehran delaying the award of rights to develop the 12.5 trillion cubic feet gas field to its discoverer Videsh Ltd India decided to cut imports from by a fifth in 2017-18.

retaliated by first cutting by one-third the time it gave to Indian refiners to pay for they buy from it as also raising ship freight rates, and then by signing a memorandum of understanding (MoU) with Russian gas monopoly Gazprom.

Farzad B was discovered by in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes India Ltd and Corp (IOC), over USD 80 million.

The field in the Farsi block has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable. New Delhi is keen that the gas from the field comes to India to feed the vast energy needs.

Sources said Indian refiners have cut imports from by a fifth to 190,000 barrels per day (bpd) in 2017-18 from 240,000 bpd in the previous fiscal.

Iran, India's third biggest supplier, used to give a 90-day credit period to refiners like Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) to pay for the they would buy from it.

Now, Tehran has reduced this to 60 days, essentially meaning that IOC and MRPL would have to pay for the they buy from in 60 days instead of previous liberal term of 90 days, sources said.

sale terms were the most attractive for Indian refiners. Besides, a liberal credit period, it also shipped the to India for a nominal 20 per cent of normal ocean freight.

Other Middle-East sellers offer not more than 15-day credit period.

Sources said National Iranian Co (NIOC) has also decided to cut the discount it offers to Indian buyers on freight from 80 per cent to about 60 per cent.

First Published: Mon, October 09 2017. 18:34 IST