New Delhi: A consortium of Oil and Natural Gas Corp. Ltd (ONGC), Petronet LNG Ltd and Hinduja Group has reached an agreement with the Iran government to source 6 million tonnes (mt) of liquefied natural gas (LNG) from the gas-rich nation in exchange for developing gas fields and setting up liquefaction facilities there.

Strategic deal: ONGC chairman and managing director R.S. Sharma says these agreements are subject to approvals. Rajkumar / Mint

ONGC Videsh Ltd (OVL), the overseas arm of India’s state-run exploration and production firm ONGC, and Hinduja Group’s Ashok Leyland Project Services (ALPS) will take a 40% participating interest in phase 12 of the giant South Pars gas field in the Persian Gulf.

ONGC, OVL, ALPS and Petronet LNG will also take a 20% equity in the liquefication facilities of Iran LNG, with a provision to raise its stake up to 40%.

The agreements were reached between an Iranian delegation headed by Seifollah Jashnsaz, Iran’s deputy oil minister and managing director of National Iranian Oil Co. (NIOC), and the Indian partners in the deal.

According to Jashnsaz, the Indian investments for the two projects will be around $10 billion (Rs46,300 crore). Iran has the world’s second largest oil and natural gas reserves.

“Investments in (the) above ventures are to be securitized through deposit of sovereign funds of Iran with Indian banks. Alternatively, the sale proceeds of crude oil supplies to Indian refineries may be used by Iran for such securitization as collaterals," ONGC said in a press statement.

“These agreements are subject to the approval to the board of the respective management and the governments," said R.S. Sharma, chairman and managing director, ONGC. Sharma said he was confident the new agreements would materialize.

The agreements come at a time when Iran is increasingly facing economic sanctions by the US over its nuclear programme.

In a separate development, Iran has agreed to consider OVL’s proposal to develop the Farsi field and bring the gas produced there to India either through a pipeline, LNG or a swap arrangement.

The Farsi block is estimated to have reserves of up to 21.68 trillion cu. ft (tcf), with recoverable reserves of around 12.8 tcf. OVL is the operator in the Farsi block with a 40% stake.

(‘PTI’ contributed to the story.)