EghtesadOnline: Oil Minister Bijan Namdar Zanganeh said on Saturday negotiations are underway with an Indian consortium led by ONGC Videsh Ltd, the foreign investment arm of India’s Oil and Natural Gas Corp. to expand Farzad B Gas Field in the Persian Gulf.
"There is no concern regarding technicalities. But the Indian company (seemingly) has financial considerations that is why talks have not produced the desired results," Zanganeh was quoted as saying by ISNA.
The National Iranian Oil Company is ready to sign the deal that has been plagued by delays and years of procrastination, he concurred.
Putting the ball in India's court, the minister said, "ONGC has yet not taken a final decision. NIOC is waiting… they should come forward," adding that Tehran and New Delhi are trying to narrow differences over investments and the gas price, Financial Tribune reported.
According to India's Petroleum Minister Dharmendra Pradhan, financial disagreements have not been settled. Nonetheless, "the field should be developed by Indian firms because technical issues have already been resolved".
Indian officials have long argued that they should have preference to develop Farzad-B as the field was discovered by a consortium of Indian companies nearly a decade ago, and additionally, because India was one of the few countries that continued to purchase crude oil from Iran when international sanctions were in place.
Energy experts including Ali Kardor, a former CEO of the NIOC and Mohammad Meshkinfam, managing director of Pars Oil and Gas Company, believe that developing the gas field is of great importance as it is shared between Iran and Saudi Arabia.
They note that the longer talks drag on; the Arab kingdom will extract larger volumes of crude from the shared field.
Iran and Saudi Arabia have a handful of shared fields, namely Farzad A, Farzad B as well as Arash gas field.
Unlike natural gas reserves in the giant South Pars Gas Field that are full of condensates —an ultra-light oil— which can be converted into value-added commodities, gas from Farzad B should either be processed and pumped into pipelines to be sold or be converted into LNG for export.
Involvement in such mega ventures requires massive funding and nobody knows why the Indian company is not willing to admit it is not economically viable for it to develop the field.
ONGC has reportedly proposed that NIOC buys the gas after it is extracted, but the fact is that the latter neither needs the gas nor has the money to purchase it.
In the master development plan OVL submitted to Iran in 2018, it estimated the upstream part to cost $6.2 billion while another $5 billion will be required to build a liquefied natural gas export facility.
It has been reported that the NIOC could consider other options to develop the field if the Indian side continues to procrastinate.
Referring to one likely option that is cooperation with a domestic firm, NIOC has said the Iranian energy company Petropars Ltd. is conducting feasibility studies to develop the field with the help of an unnamed foreign partner.
Farzad-B is estimated to hold more than 500 billion cubic meters of in-place gas reserves, of which 370 billion cubic meters are deemed recoverable.
India, the second biggest buyer of Iranian oil, won waivers from new US sanctions on Iran oil exports in November 2018, because it agreed to cut crude imports. Under the six-month exemption, Indian companies are allowed to import a maximum of 300,000 barrels a day of Iranian crude.