Iran’s proposed new deal on oil exploration may make it attractive for ONGC Videsh Ltd to develop the discovered Farsi (renamed Binaloud) block in the West Asian nation, now open for business with the West lifting the sanctions. OVL, along with its Indian partners Indian Oil Corporation and Oil India, had made the Farsi discovery in 2008. The Indian firm is keen to develop the Farzad-B gas find, which is now open to international competition, because of the estimated in-place reserves of 21.68 trillion cubic feet (tcf), of which 12.8 tcf of gas and 212 million barrels of condensate may be recoverable.

OVL and team had started exploration work as a service contractor but, under Iran’s old rule, this did not give them any claim on the discovery.

Also, like many international firms, OVL felt that to develop the fields, the RoI (return on investment) needed to be better.

According to oil industry sources, under Tehran’s new model — Integrated (or Iranian) Petroleum Contract — an international oil company can participate in all segments of the upstream business — exploration, development, and production. While the international oil company will help manage the projects, it will not have ownership of the reserves. But the company will be paid a share of the project's revenue in instalments once production starts, the sources said.

The new Iranian model, among other things, offers more flexibility on cost recovery and capital expenditure.

Narendra K Verma, Managing Director, OVL, told BusinessLine , “We will be comfortable working under the proposed Iranian Petroleum Contract. Commercial discussions are going on. We have to wait till the contract model is finalised and formally announced by Iran.” The new Petroleum Contract model has to be passed by the majlis or the Islamic Consultative Assembly.

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