India Offers To Invest $11 Billion In Iran’s Farzad-B Gas Field

Indian companies have offered to spend $11 billion to develop Iran’s Farzad-B gas field and build the infrastructure required to export the fuel if the Persian Gulf nation guarantees a “reasonable return” on the project, Reuters has reported.

Discovered in 2008 by an Indian consortium led by ONGC Videsh, India and Iran have missed several deadlines to finalise terms of development for the gas field, which has in-place gas reserves of 21.7 trillion cubic feet (tcf), of which 12.5 tcf are recoverable. Considerable delays occurred due to sanctions imposed on Iran by the United States over its nuclear program.

As Iran is now emerging from sanctions, renewed efforts are being made to reach a deal acceptable to both sides. However, impasse continues. In April, unhappy with Tehran’s response to Indian offers, state-run refiners decided to cut oil imports from Iran in 2017-18 by a fifth. This was a strong signal, given that India bought Iranian crude even during the years of US-led sanctions.

This attracted a strong response from Iran. Tehran threatened to cut the discount it offers to Indian buyers on freight from 80 percent to about 60 percent and to let Russian companies develop the field if Indian companies fail to make a satisfactory offer.

The Indian consortium, made up of ONGC Videsh, Indian Oil and Oil India, is now claiming to have given its ‘best offer’. “We have given our best offer to them. Now, it is up to them to agree or not agree,” Verma said in a phone interview. “We have told the Iranian authorities very clearly that some basic returns are necessary,” ONGC Videsh director Narendra Kumar Verma has said. ONGC Videsh and Indian Oil each own 40 percent interest in the Farsi block that holds Farzad-B field, while Oil India has 20 percent.