Iran Withdraws Offer to Indian Firms on Farzad B Gas Field

Iranian Oil Ministry has informed Indian officials that Tehran has decided to withdraw its offer on production sharing contract (PSC) for the development of the country’s Frazad B gas field to Indian contractors, The Hindu reported.

Tehran has reportedly said that the terms for participation of an Indian consortium in development of the gas field were not acceptable to Iran’s new administration.

Indian Petroleum Minister Veerappa Moily on September 9 wrote to his Iranian counterpart, Bijan Namdar Zanganeh, for a “fruitful and commercial cooperation” between the two countries.

Moily sought Zanganeh’s intervention to ensure the participation of top Indian oil and gas companies ONGC, Indian Oil and Oil India in Iran’s Farzad B gas field in Farsi block in the Persian Gulf.

India’s participation in this Iranian field would have given it access to substantial gas reserves and help it contain its huge oil import bill, as it was negotiating for a production sharing contract that could offer Indian companies a guaranteed share of production.

Under the PSC, an operator gets a share of production or revenue in proportion to its investment.

Indian companies have been in talks with Tehran since 2009 for developing the Farzad B gas field, estimated to hold over 13 trillion cubic feet of recoverable gas.

According to The Hindu, Iranian Oil Minister has also informed the Indian government that Iran would not accept full rupee payment for crude oil imports, as agreed in July this year, and India would have to explore paying the rest of the amount in euro. 

India had been paying Iran through the Ankara-based Halkbank in euro for 55 per cent of its oil imports from Iran. The rest was paid in rupee to the accounts of the National Iranian Oil Company in UCO Bank. However, payments in euro ceased on February 6.