New Delhi: In a major setback to India’s oil diplomacy, the ONGC-Hinduja Group alliance has lost the rights to develop Iran’s South Azadegan oilfield to CNPC of China.

The joint venture of ONGC Videsh Ltd—the overseas arm of state-run Oil and Natural Gas Corp. Ltd—and Hinduja Group firm Ashok Leyland Project Services Ltd, was touted to get at least 45% stake in the 260,000 barrels per day South Azadegan oilfield but Beijing apparently offered multi-billion dollar soft loans to bag the rights, industry sources said.

The China National Petroleum Corp. on Sunday signed a contract with National Iranian Oil Co.’s overseas subsidiary, Naftiran Intertrade Co. (Nico) in Lausanne, Switzerland to take 70% stake in the oilfield along the Iraqi border. Nico, which held 90% stake in the field, would be left with 20% interest while Inpex of Japan would hold the remaining 10%.

An official in the ONGC-Hinduja joint venture confirmed losing the oilfield to the Chinese but said the development rights to phase-12 of South Pars field were yet to be decided. Unnamed officials said China has used its vast foreign exchange reserves— which are nearly double of India’s $1.1 trillion (Rs52.8 trillion) GDP—to give loans to oil producing countries.