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India's OVL submits $10bn proposal to develop Iran gas field


Source: Press TV

India's ONGC Videsh Ltd (OVL), which is the overseas arm of the state-owned Oil and Natural Gas Corp, has offered a proposal worth USD 10 billion for development of Iran's Farzad B offshore gas field.

file photo: Iran's Farzad B offshore gas field

A report by the Press Trust of India (PTI) said on Tuesday that according to the proposal, the Indian company will undertake to develop the Iranian gas field and transfer the gas that it will produce to India.

"In April, we met in Iran and as per discussions, we have worked out a fully integrated proposal and submitted to Iranian authorities," OVL Managing Director Narendra K Verma told reporters.

He added that Iranian officials had asked the Indian company to come up with a plan for developing the field, which would also include options for transfer of its gas to India.

"Fully integrated proposal with lots of options has been submitted," Verma said, noting that OVL has invited Iranian officials to India for discussions on the proposal.

Farzad B gas field, which is estimated to contain 12.8 trillion cubic feet of recoverable reserves, was discovered by a consortium of OVL, Oil India Ltd and Indian Oil Corp in the Farsi block in 2008.

The gas produced from the field can either be converted into liquefied natural gas (LNG) by freezing at sub-zero temperature and shipped in cryogenic ships to India, or transported through a pipeline.

In August 2010, OVL submitted a revised Master Development Plan (MDP) for producing 60 percent of the field's in-place gas reserves, but did not sign a contract with the Iranian side out of fear that it would be exposed to sanctions imposed by the United States on Iran's energy sector, which did not allow foreign companies to invest more than USD 20 million a year in the country's energy sector.

Sanctions were imposed on Iran under the pretext that Tehran's civilian nuclear program was diverted toward military purposes; an accusation that Iran categorically rejected.

On July 14, 2015, Iran reached an agreement with the P5+1 group of world powers - the US, the UK, France, China, and Russia plus Germany - also known as the Joint Comprehensive Plan of Action. According to the agreement, Tehran will accept limitations on its nuclear program in return for the removal of sanctions on the country's economic sectors, including oil and gas industry.

In February 2012, Iran issued a one-month ultimatum to the OVL-led consortium to start the development of the field or lose the project, but did not carry out the threat of cancelling allocation of the Farsi block to OVL for more than two years.

However, to pressure India to act, Tehran last year put the field on the list of blocks it wants to auction in future, though it did not cancel OVL's exploration license for the Farsi block which gives it the right to develop the discoveries it has made.

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