Millennium Post

Iran agreed to buy OVL gas but US sanctions stalled talks

Iran agreed to buy OVL gas but US sanctions stalled talks

New Delhi: Iran had agreed to buy the gas produced from ONGC Videsh Ltd-discovered Farzad-B field in the Persian Gulf, but talks got stalled after the US reimposed sanctions against Tehran.

ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had in 2008 made a significant natural gas discovery in the Farsi offshore exploration block in the Persian Gulf, the company said in its latest annual report.

The discovery was named Farzad-B.

"Since April 2016, both sides negotiated to develop Farzad-B gas field under an integrated contract covering upstream and downstream including monetization/marketing of the processed gas, however, negotiations remained inconclusive," it said.

During 2018-19, the National Iranian Oil Company (NIOC) proposed the development of the gas field and "offtake of raw gas by NIOC at landfall point(s)," it said.

"However, due to imposition of US sanctions on Iran with effect from 5th November 2018, technical studies could not be concluded which is a precursor for commercial negotiations," OVL said.

Any company investing in the Iranian oil field will attract US sanctions, crippling its ability to access the international financial system.

OVL has projects in 21 countries and cannot risk being cut off from international payment system.

The Exploration Service Contract (ESC) for the over 3,500 sq km Farsi block was signed on December 25, 2002. OVL holds 40 per cent stake and is the operator, while the remaining stake is held by Indian Oil Corp (40 per cent) and Oil India Ltd (20 per cent).

The exploration phase of the ESC expired on June 24, 2009.

PTI

PTI

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