Indian firms line up $3 bln for Iran block gas

Iran is drawing interest from Indian and Chinese firms that are keen to tap the world's second-largest reserves of oil and gas and are less susceptible than many other companies to Western pressure over Tehran's nuclear programme.

Indian firms line up $3 bln for Iran block gas

Indian oil firms plan to invest $3 billion to develop gas fields in Iran's Farsi block if Tehran gives the go-ahead, a source at one of the companies said, adding the block holds estimated recoverable gas reserves of 12.8 trillion cubic feet.

The Persian Gulf block is the first overseas asset for which Indian firms have been given exclusive exploration rights, with a service contract awarded to them in 2002, but permission to develop the asset has yet to be given.

Iran is drawing interest from Indian and Chinese firms that are keen to tap the world's second-largest reserves of oil and gas and are less susceptible than many other companies to Western pressure over Tehran's nuclear programme.

India's state-run Oil and Natural Gas Corp and Indian Oil Corp each hold a 40 percent participating interest in the Farsi block, while smaller outfit Oil India Ltd has the rest.

It is operated by ONGC's overseas investment arm ONGC Videsh Ltd.

"So far we have invested $90 million and if we are allowed to develop the field, we would be investing around $3 billion," the senior IOC official, who did not wish to be identified, told reporters.'

He added that the firm had submitted a gas commerciality report with Iranian authorities last December.

India, which imports nearly 70 percent of its oil requirements and is Asia's third-largest oil consumer, has been intensifying its efforts to boost oil production abroad to make up for stagnating domestic output.

After an ONGC team met recently with Iranian officials, the consortium is optimistic it will be awarded development rights for the block, the source said.

"ONGC officials recently had a meeting with Iranian authorities on approval of the gas commerciality report ... They say Iran has indicated that we would be given development rights, too," he added.

Indian firms will get a return of 35 percent on the investment already made in the block, but rate of return for any further investment is "yet to be negotiated", the official said.

He said the Indian firms would this month submit its commerciality report for the block's oil, which he described as "very heavy", similar to Venezuelan crude, with an API 14 degrees.

The block is estimated to hold more than one billion barrels oil in place reserves.

In 2006, Iran -- the world's fourth largest oil exporter and which also sits atop the largest gas reserves after Russia -- said ONGC Videsh had found oil in Farsi.

ONGC and the Hinduja Group are also looking at joining the development of Iran's South Pars Phase 12 gas field and the country's Azadegan oil field.

Reuters

Last Mod: 13 Haziran 2008, 17:26
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