India on Monday lost the ONGC Videsh Ltd-discovered Farzad-B gas field in the Persian Gulf after Iran awarded a contract for developing the giant gas field to a local company.
"The National Iranian Oil Company (NIOC) has signed a contract worth $1.78 billion with Petropars Group for the development of Farzad B Gas Field in the Persian Gulf," the Iranian oil ministry's official news service Shana reported.
"The deal was signed on Monday, May 17, in a ceremony held in the presence of Iranian Minister of Petroleum Bijan Zangeneh in Tehran."
The field holds 23 trillion cubic feet of in-place gas reserves, of which about 60 per cent is recoverable.
It also holds gas condensates of about 5,000 barrels per billion cubic feet of gas.
The buyback contract signed on Monday envisages daily production of 28 million cubic meters of sour gas over five years, Shana said.
ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had in 2008 discovered a giant gas field in the Farsi offshore exploration block.
OVL and its partners had offered to invest up to $11 billion for the development of the discovery, which was later named Farzad-B.
PTI had on October 18, 2020, reported that NIOC had informed OVL of its intention to conclude the contract for Farzad-B development with an Iranian company, in an apparent rejection of the Indian firm's bid.
After this, it kept sitting on OVL's investment proposal for years.
The 3,500 square kilometer Farsi block sits in a water depth of 20-90 metres on the Iranian side of the Persian Gulf.
OVL, with 40 per cent operatorship interest, signed the Exploration Service Contract (ESC) for the block on December 25, 2002.
Other partners included Indian Oil Corp (IOC) with 40 per cent stake and Oil India holding the remaining 20 per cent stake.
OVL discovered gas in the block, which was declared commercially viable by NIOC, on August 18, 2008.
The exploration phase of the ESC expired on June 24, 2009.
The firm submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for the development of Farzad-B gas field.
A Development Service Contract (DSC) of the Farzad-B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions on Iran.
In April 2015, negotiations restarted with Iranian authorities to develop the Farzad-B gas field under a new Iran Petroleum Contract (IPC).
This time, NIOC introduced Pars Oil and Gas Company (POGC) as its representative for negotiations.
From April 2016, both sides negotiated to develop the Farzad-B gas field under an integrated contract covering upstream and downstream, including monetisation/marketing of the processed gas. However, negotiations remained inconclusive.
Meanwhile, on the basis of new studies, a revised Provisional Master Development Plan (PMDP) was submitted to POGC in March 2017, sources said, adding that in April 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by NIOC at landfall point.
However, due to the imposition of US sanctions on Iran in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations.
The Indian consortium has so far invested around $400 million in the block.
Photograph: Raheb Homavandi/Reuters