OVL loses working rights for Iran’s Farzad-B gasoline subject

State-owned ONGC Videsh Ltd (OVL) misplaced improvement rights for the Farzad-B big gasoline subject in Iran to Iranian Petropars Group. OVL owns 40 per cent taking part curiosity (PI) within the block by which gasoline discovery was first made by a consortium led by ONGC.
Indian Oil Corporation too owns 40 per cent of PI, with Oil India holding the remaining 20 per cent PI within the block. Issues in negotiations between OVL and Iranian authorities in addition to US sanctions led to the failure of a number of negotiations between the corporate and Iranian regulators to finalise a improvement plan.
“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 information service Shana reported.
The gasoline subject, which has in-place reserves of about 651 billion cubic metres of gasoline reserves, is anticipated to file about 28 million metric customary cubic meters per day (MMSCMD) of manufacturing inside 5 years. India’s whole gasoline consumption in FY21 was about 166 MMSCMD.
Sources instructed The Indian Express that Tehran had instructed India in January 2020 that it could develop the Farzad-B Gas subject by itself. It had, nonetheless, stored the door open for India to affix later.

An official, aware about the discussions, mentioned that “In January 2020, we were informed that in the immediate future, Iran would develop the field on its own and would like to involve India appropriately at a later stage.”
Experts famous {that a} lack of working rights was key as it could imply that ONGC was largely out of the driving force’s seat for an funding by which it was among the many largest stakeholders.
“Typically when a large player like ONGC has a major participating interest, it is likely that they also get operating rights which allows then to enhance or cut production as required and coordinate their capital expenditure,” mentioned an knowledgeable who didn’t want to be quoted noting that whereas ONGC would nonetheless be consulted as a key stakeholder, the operations can be managed by the Petropars group. The knowledgeable famous that an operator separate from the biggest stakeholder might additionally result in an absence of transparency and inefficiencies in procurement.

OVL had signed the exploration service contract for the block in 2002 and the block was deemed commercially viable in 2008 after a discovery of gasoline was made by a consortium of firms led by OVL. Differences between regulators and OVL on phrases of improvement and worldwide sanctions on Iran led to a improvement plan submitted by OVL in 2011 not being accredited.
Negotiations have been restarted with Iranian regulators in 2015, beneath a brand new built-in contract protecting upstream and downstream together with monetisation/ advertising and marketing of the processed gasoline however negotiation remained inconclusive. ONGC proposed a revised improvement plan in March 2017.