Iran has sought at least $1 billion as advance from India for supplying five million tonnes of liquefied natural gas (LNG) a year from 2012, but the demand may not be entertained by the buyers.
Iran LNG Co, a subsidiary of state-run National Iranian Oil Company, has asked Oil and Natural Gas Corp (ONGC) and its partner Hinduja Group to pay the advance so that it could complete a $4.35-billion plant that will liquefy the natural gas produced from fields in the Persian Gulf, a source in know of the development said.
The demand for advance money came when ONGC-Hinduja were negotiating for a stake in the development of Phase-XII of the giant South Pars field. South Pars Phase-XII is to feed gas to the LNG plant being built by Iran LNG at Tombak Port by 2011.
The source, however, said the demand was unlikely to be met, as there was no dispensation at present under which advance money could be paid for the purchase of oil or gas at a future date.
The joint venture is yet to formally say no to the proposal but will in due course convey the same, he said.
The joint venture of ONGC Videsh Ltd — the overseas arm of state-run ONGC — and Hinduja Group company Ashok Leyland Project Services Ltd was formed to acquire rights for developing the South Azadegan oil field in Iran and South Pars Phase-XII.
But the joint venture has already suffered a setback, with Iran offering the 260,000 barrels per day South Azadegan oilfield to a Chinese firm.
After giving the South Azadegan oilfield to China, Iran has trimmed by one-third the promised 60 per cent stake to ONGC-Hinduja Group joint venture in Phase-XII of the South Pars gas field, the source said.
China had won rights of the Azadegan oilfield, in which the Indian combine was previously offered 45 per cent interest, by offering multi-billion-dollar soft loans. The soft-loan approach for securing energy assets is not high on the Indian government’s agenda, as it is also wary of its firm being banned for investing in sanction-hit Iran, he said.
With US technology not coming the Iranian way, because of sanctions, the LNG plant that will turn natural gas into liquid state will use technology from Statoil-Linde of Europe.
The two trains will produce almost 8.5 million tonnes per annum of LNG from gas piped in from the Phase-XII development of South Pars gas field. The designated capacity is below the 10.5-million-tonnes-a-year target cited in recent years by Iranian officials.
Construction on the Iran LNG plant, being built at Tombak Port, about 50 kilometers north of Assaluyeh in Bushehr province, started in 2007 and is 25 per cent complete. The plant will cost $4.35 billion and is expected to become operational in January 2011.
The client for the Iran LNG project is Iran LNG Company (ILG), a subsidiary of the National Iranian Gas Export Company, itself a subsidiary of National Iranian Oil Company.
