India's energy security plan suffers a blow, likely to lose Iranian gas field

Iran has decided to develop the Farzad-B gas field in the Persian Gulf with a domestic company, dealing a setback to ONGC Videsh (OVL), the Indian PSU that discovered the field, and also to the government’s plan to boost energy security. 

The National Iranian Oil Co (NIOC), which was considering a $11 billion development proposal submitted by OVL in partnership with other companies, has said that it will give the development contract to an Iranian company.

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OVL, which does overseas investments for the government-run Oil and Natural Gas Corp (ONGC), had discovered the field in 2008 while exploring the about 3,500 square kilometre Farsi block located at a depth of 20-90 metres in water.

The Farzad-B gas field is said to contain reserves of 21.7 trillion cubic feet with 60 per cent that can be recovered. It is estimated that about 1.1 billion cubic feet of gas can be produced from the field daily.

According to officials, OVL has not given up hope on the project and that it continues to talk to Iranian authorities about the development contract. It has also asked NIOC to provide details of the contract to be signed with the local firm. The details, however, have not been given so far, officials said, according to PTI.     

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A consortium of OVL (40 per cent), Indian Oil Corp (IOC, 40 per cent) and Oil India (OIL, 20 per cent), had bagged the contract to explore the block on December 25, 2002. After it discovered the block, the NIOC in August 2008, said it was commercially viable. Subsequently, in April 2011 the consortium submitted a master development plan for the Farzad-B gas field. The contract for development could not be signed despite being negotiated till November 2012 due to international sanctions and strict clauses.

This is be the second major project India will be losing in the past couple of years. Earlier, Iran had ended an agreement with India to develop the second phase of the     Chabahar Port.