Indian Oil Corporation (IOC)signed in late November an agreement to invest in a liquefied natural gas (LNG) project in return for an upstream stake in the Yadavaran oil field. The deal resembled the agreement with China's Sinopecearlier in the month (MEED 5:11:04).

Under the terms of the memorandum of understanding (MoU), IOC will take a 60 per cent stake in a downstream LNG project, with a subsidiary of National Iranian Oil Company (NIOC)taking the remaining 40 per cent. The project will involve at least one train of 5 million tonnes a year (t/y) of LNG. IOC would also have rights to a 40 per cent stake in the upstream South Pars phase that would provide feedstock for the project.

However, due to the limited field of contractors with experience in LNG projects, IOC and NIOC are likely to bring in another company with past LNG experience. The UK's BGis still negotiating with National Iranian Gas Export Company (NIGEC) for a stake in its first LNG project and could be brought in for either a Chinese or Indian deal.

In return for the LNG investment, IOC will be guaranteed the rights to a 20 per cent stake in Yadavaran, the enormous undeveloped oil field in western Iran. Under the Sinopec agreement, the Chinese company is to develop a masterplan for the development of Yadavaran.

IOC is also looking at investment downstream in Iran. It has commissioned a feasibility study to carry out the world's largest cracker project at olefins 12 in Assaluyeh in partnership with National Petrochemical Company.