You are here: Home » Companies » News
Business Standard

OVL's Iran dream gets jolt from China

Rakteem Katakey  |  New Delhi 

India is being increasingly marginalised in Iran's energy sector for reasons which range from political to economic. Its attempts at securing oil and gas blocks in the country and importing gas (as LNG and through a pipeline) seem to be hitting a dead end.
The latest setback for India is the agreement between Iran and Chinese Sinopec for the Yadavaran oil and gas field. This effectively pushes out ONGC Videsh - the government's overseas acquisition vehicle - which had shown an interest in the field.
Iran's agreement with Sinopec for the development of the field and supply of 10 million tonnes (mt) of liquefied natural gas (LNG) a year for 25 years, nullifies the memorandum of understanding that Iran had entered into with OVL in 2005.
This promised the company three things: 5 mt of LNG, 10 per cent stake in Yadavaran field and 100 per cent stake in another field called Jufeyr.
Firms with E&P plans in Iran
Company Field
OVL Jufeyr
OVL Yadavaran
OVL South Pars
*Oil and gas has been discovered
Other oil, gas projects in Iran
* Import of 5 mt of LNG-shelved
* Gas through Iran-Pakistan-India pipeline-status uncertain
* Essar group's $2 bn refinery in Iran-status uncertain
"The agreement between Iran and Sinopec practically erases any chance that OVL had in picking up a stake in the Yadavaran field. The Jufeyr field was anyway given away to a Belarus company previously. And the LNG import deal never worked out," said a source close to the development.
"The 2005 MoU is dead," another government official said. OVL had earlier this year submitted a development plan for the Yadavaran field to Pedec, a subsidiary of the National Iranian Oil Company (NIOC). A senior ONGC executive said that the Yadavaran agreement cannot be considered "dead" as the necessary papers on the project had already been filed.
Industry officials however feel that India is in a kind of go-slow on deals with Iran, because of the failed LNG deal. Besides, the supply of gas from Iran's South Pars field to India via a pipeline through Pakistan is not moving forward. "India is cautious on deals with Iran," said a senior official of the petroleum ministry.
Opposition from the US to the pipeline, following Iran's nuclear policy, is considered to be a major stumbling block. Iranian officials had told Business Standard earlier this year that if India did not move faster on the $7 billion gas pipeline deal, Iran would consider selling its gas to China.
Indian oil are working on only one project in Iran. A consortium of OVL, Indian Oil and Oil India has discovered oil and gas in the Farsi block in the country and is now establishing its commerciality.
OVL and the Hinduja group have also shown an interest in developing certain phases of the gigantic South Pars field in Iran.

First Published: Tue, December 11 2007. 00:00 IST