New Delhi: Iran has accused India of delaying the final decision on developing its Farsi gas block because of “pressure” from the US, which has imposed sanctions on the West Asian nation over its nuclear programme.
This allegation follows the National Iranian Oil Co. approving the gas commercial viability report submitted by a consortium led by Oil and Natural Gas Corp. Ltd’s (ONGC) overseas subsidiary; ONGC Videsh Ltd, or OVL.
“We are still awaiting the ONGC’s final decision on the Farsi block, which has 12.5 billion cu. ft of gas reserves, even as our approval came in October itself. It has been more than a month but still there is no decision. If it (ONGC) were a fully private company, they would have communicated its approval within a week. There is some pressure from the West on India,” a senior Iranian foreign ministry official based in India who is close to the situation told Mint. “The Chinese and the Malaysians have been pressurizing us for the same gas field.”
OVL is the operator in the Farsi block with a 40% stake; it had won the bid in 2002. The other stakeholders in the block are Indian Oil Corp. Ltd and Oil India Ltd, with 40% and 20% stakes, respectively.
A senior ONGC executive, who didn’t want to be named, denied the charges.
“Our team is working on the proposal and (it) is in talks with various agencies for the Farsi block,” he claimed.
Iran has the world’s second largest oil and natural gas reserves. India is short on natural gas that is expected to last till 2012—the country needs at least 180 million standard cu. m per day, or mscmd, of gas, and the supply is at 81mscmd. India imports some 12mscmd of gas bought in the spot markets.
“If they (OVL) want to make a liquefied natural gas, or LNG, terminal to transport the gas, it will require an investment of $8-9 billion (Rs40,000-45,000 crore). In case they want to invest only for exploration and production work, it will cost them around $3-4 billion,” the Iranian foreign ministry official added.
Iran faces economic sanctions by the US and its allies over its nuclear programme, which the US suspects is aimed at developing nuclear weapons but Teheran says is designed to produce electric power.
While India signed a historic civilian nuclear agreement with the US, several Iran-related Indian projects have either been put on hold or dropped.
An oil and gas industry analyst at a Mumbai-based brokerage firm, who did not wish to be identified because of commercial considerations, said, “Under the current circumstances, the nuclear deal is more important than gas from Iran. Anyway, the domestic gas capacity will increase due to production from the Krishna-Godavari basin and there will also be a substantial LNG capacity coming online within (the) next three years. This will make sourcing cheaper and easier.”
While the proposed $7.4 billion Iran-Pakistan-India pipeline project is expected to fall through, Iran has said it has scrapped a $22 billion deal to sell 5 million tonnes per annum of liquefied natural gas to India due to a dispute over prices and lack of required approvals as reported by Mint on 17 November.