Iran has offered ONGC Videsh Ltd and its partners a 30 per cent interest in development of the Farzad-B gas field in the Persian Gulf that was discovered by the Indian consortium, officials said.

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), in 2008 had discovered a giant gas field in the 3,500 square kilometer Farsi offshore block.

In April 2011, it submitted a master development plan (MDP) to bring the discovery, which was named Farzad-B, for production but negotiations got stalled as international sanctions were slapped on Iran over its nuclear plans.

Negotiations restarted in 2015, but in February 2020, National Iranian Oil Company (NIOC) informed that Iranian government has decided to award the contract to develop the field to a local firm.

The exploration contract, under which OVL and its partners had discovered gas reserves in Farsi block, provided for the discoverer to be part of the field development, the officials said.

"Citing the Exploration Service Contract, Iran asked the Indian consortium to exercise its rights to participate in the development contract up to minimum 30 per cent stake," they said, adding Tehran asked the Indian firms to exercise the right within 90 days failing which it would be deemed as rejection of the offer.

Officials said for further discussion to participate in the development contract, communications and comments on Confidentiality Agreement (CA) were sent to NIOC in March and a reminder in the following month.

However, NIOC has not responded to that, they said.

OVL holds a 40 per cent stake in the 3,500 square kilometre Farsi offshore exploration block in the Persian Gulf Iran. Indian Oil Corp (IOC) holds 40 per cent stake and the remaining 20 per cent is with Oil India Ltd (OIL).

The Exploration Service Contract (ESC) for the Block was signed on December 25, 2002 and OVL in 2008 made a giant discovery on the block, which was later rechristened as Farzad-B.

The field holds 23 trillion cubic feet of in-place gas reserves, of which about 60 per cent is recoverable. It also holds gas condensates of about 5,000 barrels per billion cubic feet of gas.

The Indian consortium submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for the development of Farzad-B gas field.

A Development Service Contract (DSC) of the Farzad-B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions on Iran.

In April 2015, negotiations restarted with Iranian authorities to develop the Farzad-B gas field under a new Iran Petroleum Contract (IPC). This time, NIOC introduced Pars Oil and Gas Company (POGC) as its representative for negotiations.

From April 2016, both sides negotiated to develop the Farzad-B gas field under an integrated contract covering upstream and downstream, including monetization/marketing of the processed gas. However, negotiations remained inconclusive.

In 2016, Iran said it was examining the Indian proposal but that an agreement was unlikely because of the difference between Iran's demanded gas price and India's offer.

India offered a USD 6.2 billion development plan and a gas price of around USD 4 per million British thermal unit for Farzad-B in 2018.

Meanwhile, on the basis of new studies, a revised Provisional Master Development Plan (PMDP) was submitted to POGC in March 2017, officials said, adding that in April 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by NIOC at landfall point.

However, due to the imposition of US sanctions on Iran in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations.

In February, 2020, NIOC informed its intention to conclude the contract for Farzad-B development with an Iranian company. In March 2021, it notified the Indian consortium of signing of the development contract with Petropars, a local Iranian company.

The Indian consortium has so far invested around USD 85 million in the block. The contract provides for the Indian consortium being paid back the expense together with a fixed rate of return.