ONGC Videsh Ltd and its partners, Indian Oil and Oil India, are likely to soon sign a contract to develop Farzad B gas field off the coast of Iran at an estimated investment of over $5 billion.
"The contract to develop Farzad B gas field (in the Farsi offshore block) will be signed... Soon," Iranian Oil Ministry website SHANA quoted National Iranian Offshore Oil Company Managing Director Mahmood Zirakchianzade as saying.
The three firms had in August/September submitted a revised Master Development Plan (MDP) for producing natural gas from the massive discovery.
OVL, the lead partner in the joint venture, had in April last year submitted a master development plan for the gas discovery in the Farsi offshore block.
The discovery, which was subsequently named the Farzad-B gas field, has in-place reserves of up to 21.68 trillion cubic feet (Tcf), of which recoverable reserves may be 12.8 Tcf.
"OVL had estimated the cost of developing the Farzad-B field at about $5 billion over a 7-8 year period," an Indian official said, adding that the Iranian authorities wanted changes in the plan, which had been incorporated.
OVL holds 40 per cent interest in the Farsi offshore block, located in the eastern part of the Persian Gulf off the coast of Iran, near the Saudi Arabian border. The block covers an area of 3,500 square kilometers.
An earlier oil discovery made in the block in 2006, which was in initial estimates thought to contain one billion barrels of reserves, did not have enough reserves for commercial exploitation.
OIL holds 20 per cent interest in Farsi, while the remaining 40 per cent is with IOC.
The Indian consortium wants to liquefy the gas and ship it back home in the form of liquefied natural gas (LNG).
OVL, the overseas arm of state-run Oil and Natural Gas Corp, IOC and OIL have a service contract for the Farsi block, under which they will be reimbursed for the entire $90 million investment they made during the exploration phase, as well as get an additional 35 per cent.
If the consortia gets the developmental rights, they will be paid a 15 per cent rate of return over-and-above the investments they make.
In a commercial viability report, OVL has said the least gas volume was 9.48 Tcf and the high-case estimate was 21.68 Tcf, as per independent studies by Fugro Robertson Ltd of the UK and ONGC's Institute of Reservoir Studies.
Under Iranian rules, the project promoters are not allowed to take oil or gas out of the country. OVL had to fund all exploration operations that would be reimbursed only after ascertaining commercial viability.
