With geopolitical tensions surrounding Iran in the wake of sanctions imposed by the UN against the oil and gas-rich nation, India is in a dilemma over whether or not to go ahead with its investments in developing a promising gas field in the Persian Gulf that entails an investment of over $5 billion (Rs. 27,000 crore).
In a recent letter to the petroleum ministry, a copy of which is available with HT, state-owned ONGC Videsh Ltd (OVL) has sought the government's advice on the way ahead, as Iran has indicated unwillingness to wait further and sought India's commitment at the earliest.
"With regard to options available with OVL to get the project going, the present geo-political scenario of the UN, US and EU sanctions against Iran severely limit the possibilities to successfully execute the project," OVL said in the April 23 letter.
"Iranian side has been expressing urgency to develop the Farzad-B gas field (in the prolific Farsi block) and also indicating intentions to award the development contract to some other party, if not satisfied by the progress of negotiations," the OVL's letter added.
"Negotiations have now been continuing for more than two years and prolonging the negotiations any further is becoming increasingly difficult in view of IOOC's (Iran's Offshore Oil Company) urgency to develop the shared field. Also, this option has the risk of IOOC passing the project on to some other party," said OVL.
To Iran's proposal that OVL should immediately sign a development plan for this block at the earliest, OVL has proposed that it will try and negotiate a development service contract (DSC) with terms and conditions favourable enough to take care of the high risk to its large scale investment in the current scenario. This option, OVL said, is however subjected to the Iranian side being receptive to its propositions.
Sources said a team of IOOC is likely to visit New Delhi soon for further discussions.
OVL has so far invested $36 million in the gas field Farzad-B. The gas field was bagged by a consortium of ONGC, Indian Oil and OIL in 2002. While OVL and IOC hold a 40% stake each in the field, OIL has the remaining 20% share.