ONGC Videsh Ltd has finalised an over USD 3 billion master development plan for the coveted Farzad-B gas field off Iran and is likely to wrap up a deal by September.
The new plan, filed with Iranian Offshore Oil Company (IOOC), excludes liquefaction facilities to turn the gas into LNG for ease of shipping to nations like India, sources privy to the development said.
The two nations were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017.
Now, the deal is being targeted to be wrapped up by September after the two sides agree on a price and a rate of return for OVL's investments.
Farzad B was discovered by OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India Ltd and Indian Oil Corp (IOC), over USD 80 million.
Iran was initially unhappy with the USD 10 billion plan submitted by OVL for development of the 12.5 trillion cubic feet reserves in Farzad-B field and an accompanying plant to liquefy the gas for transportation in ships.
It felt the USD 5 billion cost OVL and its partners have put for developing the field was on the higher side and wanted it to be reduced. OVL will earn a fixed rate of return and get to recover all the investment it has made in the field development.
Sources said in the new master development plan (MDP), the company has revised the cost downwards after making some adjustments in the production facilities.
The field in the Farsi block was discovered by the OVL-led consortium in 2008. It has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable.
New Delhi is keen that the gas from the field comes to India to feed the vast energy needs.
But it initially felt deterred from investing because of the fear of sanctions imposed by the US. But with the lifting of sanctions last year, it is back to discussing a master development plan.
Sources said that gas evacuation plans are not part of the new MDP.
Gas produced from the field can either be converted into liquefied natural gas (LNG) by freezing at sub-zero temperature and shipping in cryogenic ships to India or transported through a pipeline -- via overland passing through Pakistan or sub-sea.
Options, they said, include an offshore liquefication facility.
Another option on the table is that Iran would buy the gas and use it for reinjection into depleted oilfields to boost crude output.
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