Iran Sends India Letter Over Farzad-B Project

EghtesadOnline: Iran's Oil Ministry has sent a letter to Indian officials about the Farzad-B gas project that has turned into a point of contention between the two countries in recent months, the Iranian oil minister said.

News ID: ۷۷۸۳۷۷

15 August 2017

"Recently no top-level negotiation has taken place between Iran and India [on Farzad-B gas field], but we have sent them a letter," Bijan Namdar Zanganeh was also quoted as saying by ILNA on Monday.

He did not give details about the date or content of the letter.

A consortium of Indian companies, headed by ONGC Videsh Ltd, discovered the Farzad-B gas deposit in the Persian Gulf in 2008 but was unable to develop the field after the US and UN imposed economic sanctions over Tehran's nuclear program, according to Financial Tribune.

Indians pushed for the field's development rights after last year's removal of sanctions, possibly with the mindset that they should have preference over other firms because they had discovered the field and also because India maintained its crude imports from Iran during sanctions.

But India's hopes were dampened after Tehran took a tough stance over the gas project, asserting that the field will be put out to tender. In possible retaliation, India's state crude oil refiners said they would cut crude imports from Iran for the 2017-18 fiscal year by one-fifth.

"India is one of our good costumers, but we cannot sign a contract under threat," Zanganeh was quoted as saying by ISNA in April.

Experts say that cutting imports from Iran amid an OPEC-led supply cut aimed at propping up the market exposes India's refiners to the risk of struggling to find reasonably priced alternatives.

According to Zanganeh, Iran has held parallel talks with other companies over the gas reservoir, inclluding Gazprom, Russia's fourth-largest oil producer.

Last month, ONGC Videsh submitted a proposal to invest $6 billion on the Farzad-B field and $5 billion to build a liquefied natural gas export facility in southern Iran, but Iran has not yet announced its decision.

India had been previously assigned to conduct technical surveys on Farzad-B, "but awarding the development rights to Indians was never part of the agreement", Asadollah Qarekhani, the rapporteur of Majlis Energy Commission, said last month.

Azadegan Tender

Zanganeh noted that the giant Azadegan Oilfield near the Iran-Iraq border will be awarded through a tender.

He made the statement in response to a question about Royal Dutch Shell's likelihood of sealing the Azadegan deal.

Shell, France's Total and Japan's Inpex Corporation are believed to be forerunners in the race for signing the Azadegan deal. Oil officials have also floated the possibility of awarding the field to a consortium of companies that may include all three.

Italian oil and gas firm Eni and CNPC, China's largest integrated energy company, are other contenders.

With an estimated 33.2 billion barrels of crude oil in place, Azadegan oilfield is divided into northern and southern sections. It is unclear if NIOC wants to sign a single contract to develop both sections or award the northern and southern Azadegan reservoirs separately.