NEW DELHI: India will delay taking up development of the Farzad B offshore gas field which it had won in Iran as US sanctions will make it difficult for OVL Videsh as well banks involved to invest $ 2.4 billion required to develop the first phase of gas field which is supposed to produce one billion cubic feet a day of gas.
Top officials said the investment “would be difficult under the circumstances at this juncture. We will be talking to the Iranians to ask them for more time. Once the sanctions are lifted after due negotiations we would try and invest in a fast forward mode.”
India has already stopped buying Iranian crude after the US made it clkear that it would not grant an exemption to India, Japan, South Korea and other nations from the unilateral embargo it was imposing on Iranian crude sales.
Though Iranians are believed to have threatened that they may put up the field awarded to OVL Videsh Ltd for re-bidding in case the Indians are not interested in investing, officials said that they believe the Iranians would be willing to wait as the India-Iran relations go beyond just oil purchases and contracts.
“It is a strategic relationship with many facets and we feel the Iranians will appreciate our position and be sensitive to our problems,” said officials. Prime Minister Narendra Modi is expected to meet Iranian President Hassan Rouhani on the sidelines of the Shanghai Cooperation Organization summit at Bishkek in Kyrgyzstan.
Farzad-B’s gasfields is estimated to have a reserve of 21.6 trillion cubic feet. Initially the Iranians wanted India to commit to buy the entire output from the field before awarding it to OVL. However, India pointed out that taking the entire output top India would require setting up a huge liquification plant and the economics of the project may not work out. Ultimately, a swap deal and partial conversion to CNG was conceived for the production from the field once developed. The field itself had been explored by a consortium of ONGC Videsh and Indian Oil.