India-Iran Deal Soon on Farzad-B Project

Farzad B gas field UPSC

Key Points

  • India-Iran may agree on a deal for the development of the Farzad-B gas field in the Persian Gulf by an Indian consortium led by ONGC Videsh (OVL), which helped discover the field back in 2008.
  • According to various sources, India’s petroleum minister would visit Iran on April 6-7 with the intent of signing a definitive agreement” for the project.
  • Although an OVL-Indian Oil-Oil India consortium had spent $900 million in the Farzad-B field to a 2002 preliminary pact with Iranian authorities, no formal contract to exploit the resources has been signed till date, due to the US sanctions that had prevailed on Iran.

Proceedings until now

  • While no headway in commercial exploitation of the reserves pegged at 21.68 trillion cubic feet (tcf) of which roughly 60% is believed to be recoverable, each side blamed the other for the delay and at one point, Iran contemplated to re-auction the asset along with several others under revised terms of a new Iran Petroleum Contract (IPC).
  • With the lifting of the US sanctions on Iran in January, the prospect of a negotiated deal with the Indian consortium has brightened.

Exact investments for the exploitation of the Farzad-B field

  • Will depend on several factors including technological inputs and the terms of the contract, taking out the recoverable reserves would entail $3-5 billion.
  • India had earlier suggested an integrated package for the Farzad-B project, which included swapping gas from the field with other Iranian gas at Chabahar port and also laying pipeline for transportation of the surplus gas to India.
  • According to various sources India has submitted a revised proposal for the development of the gas field to Iranian side

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