Iran holds parallel talks on Farzad B with Russian and local firms

04 September 2017

India’s ONGC Videsh has been trying to secure development rights for the massive gas field

National Iranian Oil Company (NIOC) is in discussions with an unspecified Russian company as well as local firm Petropars to develop the Farzad B gas field, according to a senior official at the national oil company.

“Parallel with these negotiations, NIOC is also in talks with Petropars as well as a foreign counsel on an appraisal project for developing Farzad A and B projects and injection of the fields’ gas to Aghajari oil field,” said NIOC’s Karim Zobeidi in comments reported by Iran’s state petroleum news agency Shana.

The Farzad B field, which is estimated to hold 19 trillion cubic feet of natural gas, was discovered by Indian energy firm ONGC Videsh in 2012. In July, ONGC Videsh made a $6bn offer to develop the field as well as build a liquefied natural gas (LNG) facility, with a total investment pledge of $11bn. However, talks have dragged on between the two sides as Iran was keen to tender the project. In May, NIOC signed a preliminary agreement with Russia’s Gazprom to develop the field.

NIOC’s Zobeidi declined to name the Russian firm that had joined the discussions over the field, but added that Iran’s Petropars will not necessarily be awarded the project.

“Even if the result of these studies are promising and positive, it does not mean that Petropars will be necessarily awarded development of the project,” he added.

NIOC has sought to include a local partner in field development projects in order to appease political hardliners who are opposed to foreign engagement in the energy sector.

The $4.8bn agreement to develop phase 11 of South Pars signed with France’s Total and China National Petroleum Company in July also included Petropars. This structure will likely serve as a framework for future field development projects.

India and Iran have engaged in a war of words over the development of the Farzad B field, with the former cutting crude imports in a bid to exert pressure on Tehran. Iran responded by saying it was unwilling to engage under pressure and was not obliged to award the project to the Indian firm.

Increasing gas output, as well as the development of LNG facilities, form part of Iran’s target to boost its share of global gas production.

Iran currently produces 0.1 per cent of the world’s gas output, but wants to reach 10 per cent by 2025 as it looks to become a net gas exporter.

At present, nearly all of the 202.4 billion cubic metres of gas produced in the country is consumed domestically, with some additional supplies allocated for export to neighbours Iraq, Azerbaijan and Turkey through pipelines.

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