OVL makes huge gas discovery in Iran

ONGC Videsh Ltd (OVL), the overseas investment arm of Oil and Natural Gas Corporation (ONGC), has struck gas in Iran's Farsi block, which is reported to have reserves of around 10 trillion cubic feet (tcf).

The reserve is the largest an Indian company has in a foreign country.

The rich Sakhalin-1 oil and gas field, in which OVL holds 20 per cent stake, has estimated reserves of around 2 tcf. Reserves in gas blocks in Myanmar, in which OVL has 20 per cent and GAIL (India) 10 per cent stake, are estimated at around 3.5 tcf.

The largest gas discovery in India is believed to be Gujarat State Petroleum Corporation's estimated 20 tcf reserves in the Krishna-Godavari basin. Reliance Industries' block in the K-G basin is estimated to hold around 11.3 tcf gas.

OVL, which is the operator in the 3,500-sq-km Iranian block, has 40 per cent stake, while Indian Oil Corporation (IOC) holds another 40 per cent. Oil India Ltd (OIL) holds the remaining 20 per cent.

OVL and OIL officials, however, said the extent of the reserves was being assessed. "The gas was discovered around three months ago. It is difficult to put a figure to the reserves at the moment. The discovery, however, is large," said an ONGC official.

ONGC Chairman and Managing Director RS Sharma said the gas had been found in the fourth and final well in the block off the Bushehr Port in Iran. "The reserves appear to be commercial," he said.

An OIL official said production of the gas from the block was expected to begin by 2010. "We have to present the development plan to the Iranian authorities for bringing to production the oil and gas finds in the block," the official said.

Last year, the company had found oil in the first well it drilled in the block. The second well delivered 2,000 barrels per day of oil. The reserve were found to be lesser in the third well. "The first well showed promise but nothing much has turned out of it," OIL Chairman and Managing Director MR Pasrija said.

The find is significant as it paves the way for increased cooperation in the energy sector with Iran, Pasrija added. "Diplomatically too it is very significant," he said.

Under the contract with the Iranian government signed in late 2002, OVL cannot take oil and gas found in the block to India. ONGC's share price on the Bombay Exchange fell 1.39 per cent to Rs 909.35 even as the benchmark Sensex rose marginally by 16.05 point on Wednesday.