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MAY 31 2017

Farzad B gas field row: Iran threatens to replace India's OVL with Russian firms

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 31st MAY 2017

 

Iran has threatened to rope in Russian oil companies for developing the Farzad B gas field, replacing the consortium of Indian state-run entities that discovered it.

The threat comes in retaliation to New Delhi's move to cut purchase of Iranian oil over Tehran's delay in awarding the block. Reports from Vienna quoted Iran's oil minister Bijan Zanganeh as saying that he expected Russian firms to enter the field if the Indian consortium failed to come up with a satisfactory offer.

Indian officials here sought to downplay the statements made by Iranian authorities recently and said that the two countries remained positive about India's role in developing the offshore field.

However, sources said that Tehran has for some time now been toying with the idea of carving the block for companies from other countries and leave only a small part for the Indian consortium.

While the two countries share a "cautious closeness" in the geopolitical arena, there has been in a stalemate over awarding the field since it was discovered in 2008 by a consortium led by ONGC Videsh Ltd, the overseas acquisitions arm of flagship explorer ONGC.

India had stood by Iran through the sanctions over Tehran's nuclear programme and continued to buy its crude after securing a US waiver, citing its rising appetite for oil.

The two sides have missed several deadlines to strike a deal for Farzad-B despite oil minister Dharmendra Pradhan's visit to the country last year. India has blamed Iran's flip-flop over the terms of the delay, while Tehran holds the Indian consortium's offer as "unsatisfactory".

India had in March submitted a revised plan for developing the field, reducing the proposed investment to $3 billion from $4 billion. Iran, however, is still not satisfied.

As reported by TOI, miffed with the delay, New Delhi has asked its refiners to reduce oil imports from Iran by a fifth. Iran hit back by reducing the payment window from 90 days to 60 days for Indian refiners. Simultaneously, National Iranian Oil Company has also cut the discount on ocean freight it offered to Indian buyers from 80% to nearly 60%.

Iranian news agency IRNA reported in April that Iran was not going to respond kindly to any language of threat or intimidation. "We cannot enter deals under threats,” the agency had quoted Zanganeh as saying.

 

Tags

Delhi Gas Oil ONGC Gas Field ONGC Videsh United States Iran India ongc

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