India ratchets up diplomatic push to secure Iranian gas assets

KOLKATA (miningweekly.com) – India has initiated a diplomatic push to ensure its toe-hold in the Farzad-B Iranian gas field and to avoid retendering for the Persian Gulf asset.

The diplomatic initiative to back ONGC Videsh Limited’s bid to develop the estimated 12.8-trillion cubic foot Farzad-B gas reserve was launched last month in New Delhi by the Indian External Affairs Minister Sushma Swaraj at the India-Iran Joint Commission meeting, where the Minister sought an early conclusion of the contract under the new Iranian Integrated Petroleum Contracts (IPC), a senior government official said.

He said that India-Iran Joint Commission had been chosen as the platform to push India’s case for developing the gas reserves, development plans for which had already been submitted by ONGC Videsh, the overseas arm of India’s national oil and gas explorer and producer ONGC Limited.

India has sought another round of Joint Commission meetings in Tehran at the earliest convenient date as Swaraj wanted early settlement of a contract for ONGC Videsh and to avoid a situation where the Iranian government went in for fresh tendering for bids to develop the Farzad B reserves, the official said.

Indian exploration and production (E&P) companies had secured the rights to develop the Farzad-B offshore block in the Persian Gulf in 2010, but the contract could not be executed owing to sanctions against Iran.

However, sanctions were lifted following a nuclear deal.

India-Iran bilateral negotiations relating to the gas reserves were revived in July 2015, but the Indian government was now readying to ratchet up such talks to the level of the Foreign Office to add muscle to the Indian bid.

Though not officially stated, there were indications that in the wake of years of delay in signing up with India, the Iranian government was considering retendering the Persian Gulf gas asset, with Indian officials fearing that cash-rich western oil companies would find it easier to come away with the block.

A consortium of Indian oil and gas E&P companies, led by ONGC Videsh, in August submitted a revised developmental plan for the Farzad-B gas fields.

The first development plan submitted by the E&P consortium was based on ownership entitlement of the gas reserve, while the Iranian government subsequently moved towards favouring production-sharing arrangements with contractors based on developer-operator agreements.

However, it was still not clear whether the main bone of contention stalling signing of the contract was any nearer settlement.

It was also unofficially acknowledged that India was running out of time for successful bilateral engagements to keep Indian interests alive since the Iranian government had scheduled to put in play its new IPC next month, and could exercise the option of retendering Farzad B if contracts with India could not be clinched by then.