The Hindu Business Line : Iran approves ONGC Videsh gas commerciality report of Farsi block

Plans ahead
The Indian companies plan to invest close to $3 billion to develop the gas field
The block is estimated to hold in place reserves of more than 1 billion barrels of oil
This was the first block where OVL, as an operator, had struck oil and gas

Our Bureau

New Delhi, Nov. 2 The gas commerciality report of ONGC Videsh Ltd (OVL) and its consortium partners on the discovery made in Iran’s Farsi offshore block has got the nod of the National Iranian Oil Corporation (NIOC). Official sources told Business Line that NIOC has formally accepted the commerciality report of the gas discovery.

With this, Indian companies can now work towards the development of the gas field. Iran follows a bidding mechanism for giving development rights. According to estimates, the block holds recoverable gas reserves of about 12.5 trillion cubic feet. In December last year, OVL and its partners Indian Oil Corporation and Oil India Ltd had submitted the commerciality report for the approval of NIOC.

The Indian companies plan to invest close to $3 billion to develop the gas field. The Indian companies have invested $90 million so far in the field. Though the reservoir is mainly gas, OVL and its consortium have also struck oil in the field. The block is estimated to hold in place reserves of more than 1 billion barrels of oil. This was the first block where OVL, as an operator, had struck oil and gas.

Bagging the bid

OVL had won the bid for the 3,500-sq-km Farsi offshore block in early 2002 and signed the exploration service contract (ESC) with NIOC on December 25, 2002. OVL is the operator of the block with a 40 per cent participating interest, while IOC holds another 40 per cent and the remaining 20 per cent stake is held by Oil India.

India imports nearly 70 per cent of its oil requirements. And domestic oil companies have been intensifying their efforts to boost oil production abroad to make up for stagnating local output.

In view of the unfavourable demand-supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is being seen as one of the important components of enhancing energy security, sources said.

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