OVL to submit revised investment plan for Iran gas field

ONGC Videsh Ltd and its partners, Indian Oil and Oil India, will this month submit a revised plan for producing natural gas from a massive discovery off the coast of Iran, after Tehran insisted on changes in the original USD 5 billion investment plan.

"The Master Development Plan is being revised based on suggestion/advice of Iranian authorities," an official in the three-way consortium said. "The revised MDP is expected to be re-submitted by this month end."

OVL, the lead partner in the joint venture, had in April last year submitted a master development plan for the gas discovery in the Farsi offshore block.

The discovery, which was subsequently named the Farzad-B gas field, has in-place reserves of up to 21.68 trillion cubic feet (Tcf), of which recoverable reserves may be 12.8 Tcf.

"OVL had estimated the cost of developing the Farzad-B offshore gas field at about USD 5 billion over a 7-8 year period," he said, adding that the Iranian authorities wanted changes in the plan, which are now being incorporated.

The official did not elaborate on the changes Iran had sought.

OVL holds 40 per cent interest in the Farsi offshore block, located in the eastern part of the Persian Gulf off the coast of Iran, near the Saudi Arabian border. The block covers an area of 3,500 square kilometres.

An earlier oil discovery made in the block in 2006, which was in initial estimates thought to contain one billion barrels of reserves, did not have enough reserves for commercial exploitation.

OIL holds 20 per cent interest in Farsi, while the remaining 40 per cent is with IOC.

The Indian consortium wants to liquefy the gas and ship it back home in the form of liquefied natural gas (LNG).

OVL, the overseas arm of state-run Oil and Natural Gas Corp, IOC and OIL have a service contract for the Farsi block, under which will be reimbursed for the entire USD 90 million investment they made during the exploration phase, as well as get an additional 35 per cent.

If the consortia gets the developmental rights, they will be paid a 15 per cent rate of return over-and-above the investments they make.

In a commercial viability report to the National Iranian Oil Company, OVL -- the operator of the field -- has said the least gas volume was 9.48 Tcf and the high-case estimate was 21.68 Tcf, as per independent studies by Fugro Robertson Ltd of the UK and ONGC's Institute of Reservoir Studies.

Under Iranian rules, the project promoters are not allowed to take oil or gas out of the country. OVL had to fund all exploration operations that would be reimbursed only after ascertaining commercial viability.