1251 GMT March 25, 2018
The company, which is the overseas arm of India's state-owned Oil and Natural Gas Corporation Ltd., will also rework the $6.2 billion cost of developing Farzad-B gas field in the Persian Gulf, which it had discovered a decade back, to get Iran to award rights of the field to it, sources privy to the development said, bloombergquint.com reported.
ONGC Videsh is one of the 34 companies Iran prequalified last year for the development of South Azadegan field, which contains an estimated 33 billion barrels of in-situ oil, of which six billion barrels are deemed recoverable. The field currently produces about 80,000 barrels of oil per day (four million tons per annum) and output is envisaged to touch 320,000 barrels a day (16 million tons).
Sources said ONGC Videsh will make a formal bid when National Iranian Oil Company opens a tender for developing the South Azadegan oilfield.
Other firms prequalified include Japan's Inpex Corporation, China’s CNPC, Eni of Italy, Sinopec of China and Russia’s Gazprom, Lukoil and Rosneft.
Sources said ONGC Videsh had last year made its 'best' offer to invest $11 billion in developing Farzad-B field as well as in building the infrastructure to export the gas but Iran has deterred awarding the rights of the field to the Indian firm owing to differences over pricing of the fuel.
With the deal on the verge of collapsing, ONGC Videsh has offered to do just the upstream part of bringing the field to production while leaving the marketing of the fuel to Iran, they said, adding that the upstream part is to cost $6.2 billion while another $5 billion will be required to build a liquefied natural gas export facility.
Iran believes the upstream investment should not be more than $5.5 billion.
Farzad B was discovered by ONGC Videsh in the Farsi block about 10 years ago. The field has an in-place gas reserve of 21.7 trillion cubic feet, of which 12.5 tcf are recoverable.
On Saturday, India's Oil Minister Dharmendra Pradhan held talks with his Iranian counterpart counterpart Bijan Namdar Zanganeh in New Delhi during which he pressed for a stake for Indian companies in a producing oilfield and promised to raise crude oil import from the Persian Gulf nation in the year beginning April to reverse the reductions introduced in the current financial year.
Zangeneh said he was 'optimistic' about signing of an agreement awarding rights of Iran's giant Farzad-B gas field to its discoverer, ONGC Videsh. A team of officials led by ONGC Videsh will be visiting Tehran this week to renegotiate terms.
He said Indian public and private sector oil companies will in financial year 2018-19 buy 0.5 million barrels of crude oil per day (25 million tons).
This will be 25 percent more than current fiscal year's imports estimated at 370,000 barrels per day (18.5 million tons).
India had in the current fiscal year cut oil imports from Iran by nearly 25 percent over delays in the awarding of Farzad-B development rights to ONGC Videsh. In 2016-17, India had imported 510,000 barrels per day (25.5 million tons) of oil from Iran.
Pradhan said Iran has given 'good incentives' on crude oil exports to India.
"It will be beneficial for India to buy more crude from Iran rather than from other countries. We have agreed that India will buy more crude oil from Iran in coming days."
Like the recent acquisition of 10 percent stake in 20 million tons a year producing oilfield in the UAE, India made a case for a stake in a producing Iranian oilfield, he said, adding that on Indian horizon was a field like South Azadegan.
"The deadlock we had on the viability of Farzad-B block, its size of capex, return, timeline, we discussed all the three issues. We have exchanged our positions. Next week our business delegation will go to Tehran to discuss all these issues."
The two sides, he said, decided to remove "all the bottlenecks on all the three issues. On the capex, business model and timeline. We have decided today to reopen and re-engage on all three issues again".