ONGC Videsh gas deal with Iran by Jan

A consortium of Indian companies led by ONGC Videsh (OVL) is set to strike a deal with Iran for the economic development of Farzad-B gas field in the Persian Gulf by January next year.

This comes at a time when Iran surpassed Saudi Arabia to become the biggest oil supplier to India in October, after  sanctions on the former were lifted in January. According to a Reuters report, in October this year, the supply from Iran zoomed to 789,000 barrels a day (bpd), compared with Saudi Arabia’s 697,000 bpd. “Our relationship with Iran is strategic and long-standing. As far as the Farzad project is concerned, financial issues will be sorted out and we will finalise the deal by January. We have already appointed a consultant for that,” said an official close to the development.

Though India had shown its interest in the project long back, sanctions by the United States and other western countries on Iran delayed things. Farzad-B has gas reserves of about 21.6 trillion cubic feet.

Managing director of Pars Oil and Gas Company (which is in-charge of the project), Mohammad Meshkinfam, told the Iran media that deemed “economic development model” was the main basis of disagreement between both the countries. “In case no agreement is reached in the envisaged time, the development of Farzad-B will be put out to an international tender,” he said.

Under Petroleum Minister Dharmendra Pradhan, India has focussed on countries such as Iran and Russia for sourcing of hydrocarbons. In the recent past, India had invested about $4.25 billion in Russia only. A consortium led by state-run Indian Oil Corporation, Oil India and Bharat PetroResources had signed a $1.3-billion deal in Russia for 29.9 per cent stake in the Taas-Yuriakh oilfield in March. Later, the consortium also struck a $2.02-billion deal for 23.9 per cent in Rosneft’s Vankor field.

According to the Petroleum Planning and Analysis Cell, India imported 202.85 million tonnes of crude oil in 2015-16 for Rs 4.16 lakh crore, up from 189 million in 2014-15.

Building ties with Iran through oil

• In April, Petroleum Minister Dharmendra Pradhan had visited Iran; Farzad-B gas field was one of his top priorities during the discussions
• $20-billion investment from Indian companies promised by Pradhan
• India plans to set up petrochemical and fertiliser plants, including in Chabahar SEZ, through joint ventures 
• India also has plans to import LPG from Iran and set an extraction plant in Chabahar
• In October, Iran became largest supplier of crude oil to India
• Iran surpassed Saudi Arabia to become the biggest oil supplier to India in October, after sanctions on Iran were lifted in January