August 21, 2015
Tanchum: India Seeks ‘Auspicious Re-birth’ in Iran’s Energy Sector
After Iran had rejected India’s early May offer to develop of Iran’s Farzad-B offshore natural gas block, New Dehli is making a renewed new effort to woo Tehran’s approval. ONGC Videsh Ltd. (OVL), the overseas arm of India’s state-owned Oil and Natural Gas Corporation reportedly is now prepared to make concessions on cost recovery and capital expenditure to secure the Farzad-B contract. Under pressure from the United States during the sanctions regime, India delayed and ultimately relinquished Farzad’s development and also withdrew from the Iran-Pakistan-India pipeline project slated to bring 11.3 billion cubic meters of Iranian natural gas per year to India. In Persian, the name Farzad means “auspicious birth.” With a recently proposed Iran-Oman-India undersea gas pipeline potentially in the offing, New Delhi is hoping for an “auspicious re-birth” in Iran’s natural gas industry by seeking to regain the Farzad development project.
In 2008, OVL discovered natural gas in the block, now estimated to hold 759 billion cubic meters (bcm) of in-place reserves. One of the two 40 percent stakeholders in the gas block, OVL became the operator for Farzad-B’s development. Yet, under pressure from the United States and facing difficulties obtaining technology and financing due to international sanctions against Iran, OVL and its two Indian partners delayed the $8 billion project. India was forced to surrender Farzad-B to Iran, which put the block back up for auction in 2014.