Iran sanctions could put OVL plans on backburner: ONGC

The ongoing sanctions imposed by the US and some European countries against Iran due to its nuclear programme may put some of the ONGC Videsh's (OVL) plans in that country on the backburner, according to a top executive of Oil and Natural Gas Corporation (ONGC).

The chairman and managing director of ONGC, Sudhir Vasudeva, said things could be challenging for the state oil and gas explorer due to sanctions against the Persian Gulf nation.

In Iran, OVL, the overseas arm of ONGC, is currently engaged in the Exploration Service Contract (ESC) for Farsi Offshore Exploration Block involving the Master Development Plan for the Farzad -B’ Gas Field in the Persian Gulf at an estimated investment of over $5 billion.

"We are not in production phase anywhere in Iran. Only thing is our plans may go on the backburner. No project is in production phase and it does not affect immediately. But development plans can get affected depending on if the situation does not improve," Vasudeva told PTI during his recent visit to Hyderabad.

ESC for Farsi Offshore Exploration Block was signed in December, 2002. OVL as an operator with 40% stake carried out seismic survey and drilled four exploratory wells in the Block during 2006-07 resulting in discovery of oil and gas. The other consortium partners are IOC with 40% and OIL with 20% stake.

Subsequently, the Farzad-B gas field was declared Commercial in 2008 by National Iranian Oil Company.

The Master Development Plan for the Farzad ‘B’ Gas Field is currently in the finalisation stage. OVL’s share of investment was about $36 million as on March 31, 2011.

Replying to a query on reports of the Iranian Government’s deadline to the Indian oil and gas major to sign the Farzad–B development contract, Vasudeva merely said these are all routine matters and did not attract significance.

On the possible disruptions of the crude imports from Iran, Vasudeva said India is currently getting 18 million tonnes of oil from that country and it will be difficult for the Indian refineries to change the current arrangement.

"Overnight if you want to change it is not possible. First of all refineries are also configured to handle a particular crude. If Iranian crude is not available then you will have to find a crude which is substitutable for Iran crude," he explained.

OVL is currently present in 15 countries with 33 projects, according to him.