India on Monday lost the ONGC Videsh (OVL)-discovered Farzad-B gas field in the Persian Gulf after Iran awarded a contract for developing the giant gas field to a local company. 

“The National Iranian Oil Company (NIOC) has signed a contract worth $1.78 billion with Petropars Group for the development of Farzad-B Gas Field in the Persian Gulf,” the Iranian Oil Ministry’s official news service Shana reported. “The deal was signed on Monday, May 17, in a ceremony held in the presence of Iranian Minister of Petroleum Bijan Zangeneh in Tehran,” the report added. 

The gas field holds 23 trillion cubic feet (tcf) of in-place gas reserves, of which about 60 per cent are recoverable. It also holds gas condensates of about 5,000 barrels per billion cubic feet of gas. The buyback contract signed on Monday envisages daily production of 28 million cubic metres of sour gas over five years, Shana said. 

OVL, the overseas investment arm of State-owned Oil and Natural Gas Corporation (ONGC), had in 2008 discovered the giant gas field in the Farsi offshore exploration block. OVL and its partners had offered to invest up to $11 billion for the development of the discovery, which was later named Farzad-B. The 3,500-sq km Farsi block sits in a water depth of 20-90 metres on the Iranian side of the Persian Gulf.

NIOC had informed OVL last year of its intention to conclude the contract for Farzad-B development with an Iranian company in an apparent rejection of the Indian company’s bid. 

OVL, with 40 per cent operatorship interest, had signed the Exploration Service Contract (ESC) for the block on December 25, 2002. Other partners included Indian Oil Corporation with 40 per cent stake and Oil India holding the remaining 20 per cent stake. 

OVL discovered gas in the block, which was declared commercially viable by NIOC, on August 18, 2008. The exploration phase of the ESC had expired on June 24, 2009.