ONGC Videsh Ltd and its partners, Indian Oil Corp and Oil India, are in last lap of negotiations for developing the Farzad B gas field off the coast of Iran at an estimated investment of over USD 5 billion.

An official in the consortium said that "There has been lot of discussions on the field development plan we submitted to Iranian authorities. Negotiations currently are centring around stitching together a services contract.”

The official said the Iranians still have some issues with respect to the development plan, but these are likely to be sorted out soon. The consortium will get a fixed rate of return on the USD 5 billion it will invest on developing the field, as Iranian law prohibits foreigners owning oil and gas resources. Foreign companies develop the fields through service contracts.

Indians can buy Iranian gas from the remuneration they receive under the service contract.

The official said financing of the development plan would be looked into once Iran awards development rights to the Indian consortium. He said that "We will cross the bridge when we reach there.”

National Iranian Offshore Oil Company had in October, 2010, stated that the contract to develop the Farzad B gas field in the Farsi offshore block would be signed soon.

OVL, the lead partner in the joint venture, had in April, 2009, submitted a master development plan for a massive gas discovery it had made in the Farsi offshore block. After the Iranians raised certain queries, it submitted a revised Master Development Plan (MDP) in August/September, 2010.

The discovery, which was subsequently named the Farzad-B gas field, contains in-place reserves of up to 21.68 trillion cubic feet out of which the recoverable reserves may amount to 12.8 tcf.

The official said that "OVL had estimated the cost of developing the Farzad-B field at about $5 billion over a 7 to 8 year period adding that the changes wanted by Iranian authorities have been incorporated in the plan.”

OVL holds a 40% participating interest in the Farsi offshore block, located in the eastern part of the Persian Gulf, off the coast of Iran. OIL holds a 20% stake, while the remaining 40% is held by IOC. The block covers an area of 3,500 square kilometres.

(Sourced from PTI)