Indian firm makes $11bn bid for Iranian gas field

05 July 2017

The offshore gas field was discovered in 2012

Indian energy firm Oil and Natural Gas Corporation (ONGC) has made an $11bn offer to develop Iran’s offshore Farzad B gas field, which it discovered in 2012.

“ONGC Videsh Ltd has offered to invest as much as $6 billion on the Farzad-B field and spend the rest to build a liquefied natural gas export (LNG) facility,” said Narendra Kumar Verma, managing director of ONGC’s overseas arm in comments reported by international media.

The project has suffered from slow development as talks have dragged on both sides. Frustrated with the lack of progress from their Indian counterparts, Iran signed a preliminary agreement with Russia’s Gazprom.

ONGC Videsh has said that the offer is contingent on “reasonable returns” on the project, from which it is seeking around 18 per cent return on investment. The firm has said it was willing to buy nearly all of the gas extracted from the offshore gas field.

Farzad B is estimated to hold around 21.7 trillion cubic feet of gas, of which 60 per cent is recoverable.

Iran is keen to increase its share of gas production from the current 0.1 per cent to around 10 per cent by 2025, as it seeks to become a net exporter. It presently consumes nearly all of the 202.4 billion cubic metres of gas produced in the country, with some additional supplies having been allocated for export to neighbours Iraq, Azerbaijan and Turkey through pipelines.

Iran is looking to prioritise production of LNG as increased production from South Pars comes on-stream. The country has no functioning LNG manufacturing facility, though France’s Total was rumoured to have shown interest in developing a facility at Tombak.

On 3 July, the National Iranian Oil Company signed a $4.8bn agreement with Total to develop phase 11 of South Pars - its first big foreign investment deal in the energy sector since nuclear sanctions were lifted last year.

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