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Hindujas may ink pact to develop oil, gas fields in Iran

New Delhi, March 27, IRNA -- Oil and Natural Gas Corporation (ONGC) and its partner Hindujas Group may sign a multi-billion dollar deal next month for developing oil and gas fields in Iran.

The ONGC-Hindujas combine would meet Iranian authorities around mid-April to finalize "participating agreement" for the development of Phase-12 of the giant South Pars gas field and South Azadegan oilfield, ONGC Chairman and Managing Director R S Sharma told reporters in New Delhi on Wednesday.

The consortia was in Tehran earlier this month to do technical due diligence for the two fields but ended up being shown old data for the Phase-12 and no data of South Azadegan, Doordarshan news portal reported here.

"The next meeting is scheduled tentatively around mid-April... we hope to sign participating agreement (for the two fields) then," Sharma said.

The development of the two fields are part of the 20 billion dollar investment ONGC and Hindujas have planned together.

Hindujas, together with state-run ONGC's overseas arm ONGC Videsh Ltd, are to invest eight billion dollars in developing the onshore South Azadegan oilfield and Phase-12 of the offshore South Pars gas field.

The two firms would court Switzerland-registered Naftiran Intertrade Co (NICO), a unit of National Iranian Oil Co for the deal, he said.

NICO has been offered a stake in the 15 million tons oil refinery, one million tons petrochemical plant and 7.5 million tons LNG receipt facility planned by Hinduja-ONGC at an investment of over 10 billion dollars at either Kakinada in Andhra Pradesh or Mangalore in Karnataka.

Petropars, the subsidiary of NICO that has been awarded development rights for South Pars Phase-12, and PetroIran, another subsidiary of NICO owns 90 percent development rights of Azadegan oilfield.

The Indian consortium of Hinduja Group and OVL will get 60 percent stake in development of South Pars Phase-12 and just over 50 percent in Azadegan field, sources said.

Azadegan field will produce 150,000 barrels per day of oil in first phase that would double subsequently, while South Pars Phase-12 would produce 12 million tons of gas that would be converted into LNG at a two-billion dollar facility.

Hinduja-ONGC have sought supply commitment for the entire oil produced from Azadegan field and 7.5 million tons of LNG from South Pars Phase-12.

The development of Phase-12 of South Pars field and the Azadegan field would cost eight billion dollars, while putting up a facility to liquefy the gas for export as LNG another two billion dollars, sources close to the negotiations among the three companies said.

In India, the consortium plans to invest five billion dollars for setting up a 15 million tons refinery, one billion dollars in LNG terminal and 3-4 billion dollars in power and petrochemical plants.

Iran does not give companies a stake in its oilfields but signs buyback agreements where companies hand over operations of fields to National Iranian Oil Company after development and then receive payments from oil or gas production for a few years to cover their investment.

Sources said Hinduja-OVL would get a fixed percentage over their investment as remuneration for development of the oil and gas fields.

In return, the Indians have sought supply commitment to fire their plants back home.

OVL and Ashok Leyland Project Services Ltd - a unit of Hinduja Group - had last month signed a MoU for collaboration on the Iranian project.

Hinduja Group had previously secured an agreement with NICO for the two projects.

ONGC to produce 29 mn tons oil in 2008-09, same as in 2007-08 State-run Oil and Natural Gas Corp (ONGC) plans to produce 29.04 million tons crude oil in 2008-09, unchanged from the quantity produced in the previous fiscal.

The company has also set a target of 25.05 billion cubic meters of gas, which is also unchanged from the 2007-08 level, according to the performance MoU signed by the company with the government.

The performance MoU was signed by Petroleum Secretary M S Srinivasan and ONGC Chairman and Managing Director R S Sharma, a company press release said in New Delhi.

Production of value-added products has been targeted at 3.320 million tons of oil equivalent in 2008-09 as against 3.245 million tons oil equivalent in the previous fiscal.

Reserve accretion target has been fixed at 64.5 million tons of oil equivalent. The target excludes overseas acquisitions, the release said.

Gross revenue is expected at Rs 54,601 crore, up from Rs 52,294 crore, and gross margins at Rs 31,933 crore from Rs 31,013 crore.

The weightage for Subsidiary Management has been increased to 10 percent (four percent MRPL and six percent OVL) from the level of 4 percent (2 percent each) in MoU 2007-08.

Consequent upon the recommendations of the Task Force, certain new indicators of performance have been included in this MoU for the first time like Under Project Management activity schedule of Coal Bed Methane (CBM) and Under Ground Coal Gasification (UCG), which will be given weightage.

... Payvand News - 03/27/08 ... --

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