ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corporation, has made a big natural gas discovery in Iran with in-place reserves being estimated at around 10 trillion cubic feet.

OVL had previously discovered oil in Iran's Farsi offshore block that lies 90-km off Bushehr port. "We have now made a natural gas discovery in the fourth and final commitment well on the block," a top company official said in New Delhi.

The company has 40 per cent stake in the 3,500 sq km block. Indian Oil Corporation has a similar stake while Oil India Ltd has the remaining 20 per cent stake in the block.

Though the official said reserves are under appraisal, some estimates put the in-place gas reserves at 10 trillion cubic feet and oil reserves at 1 billion barrels.

However, under the contract with the Iranian government, OVL cannot take oil and gas found in the block to India. "We have a service contract under which we are paid a pre-fixed return on the investment we make," the official said.

OVL will now present a development plan to the Iranian authorities for bringing to production the oil and gas finds in the block. On the expenditure it made during exploration phase, Iran will pay a 35 per cent rate of return.

For the development phase, the rate of return is to be determined.