ONGC Videsh Ltd. (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), had in 2008 discovered a giant gas field in the Farsi offshore exploration block, business-standard.com reported.

OVL and its partners had offered to invest up to $11 billion for development of the discovery, which was later named Farzad B.

After sitting over OVL’s proposal for years, the National Iranian Oil Company (NIOC) informed the firm in February this year about its intention to conclude the contract for Farzad B development with an Iranian company, sources with direct knowledge of the development said.

OVL, however, continued its engagements with the NIOC over the development of the field and sought terms and conditions of the proposed contract for its evaluation, they said, adding that Iran has so far not responded to the Indian firm’s request.

Farzad B holds total reserves of around 21.7 trillion cubic feet of which around 60 percent is recoverable, and production is slated to be around 1.1 billion cubic feet per day.

Sources said unconfirmed information suggests that Iran has identified a local firm for the development of the field, but OVL has not yet given up hopes and continues to chase Iranian authorities for the contract.

The 3,500-square-kilometer Farsi block sits in water depth of 20-90 meters on the Iranian side of the Persian Gulf.

OVL, with a 40 percent operatorship interest, signed the exploration service contract (ESC) for the block on December 25, 2002. Other partners included Indian Oil Corporation (IOC) with a 40 percent stake and Oil India Ltd. (OIL) holding the remaining 20 percent stake.

OVL discovered gas in the block, which was declared commercially viable by the NIOC, on August 18, 2008. The exploration phase of the ESC expired on June 24, 2009.

The firm submitted a master development plan (MDP) of Farzad B gas field in April 2011 to the Iranian Offshore Oil Company (IOOC), the then-designated authority by the NIOC for development of Farzad B gas field.

A development service contract (DSC) of Farzad B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions on Iran.

In April 2015, negotiations restarted with Iranian authorities to develop Farzad B gas field under a new Iran Petroleum Contract (IPC). This time, the NIOC introduced Pars Oil and Gas Company (POGC) as its representative for negotiations.

From April 2016, both sides negotiated to develop Farzad B gas field under an integrated contract covering upstream and downstream sectors and industries, including monetization/marketing of the processed gas. However, negotiations remained inconclusive.

Meanwhile, on the basis of new studies, a revised provisional master development plan (PMDP) was submitted to POGC in March 2017, sources said, adding that in April 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by the NIOC at landfall point.

However, due to the reimposition of US unilateral sanctions on Iran in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations.

The Indian consortium has so far invested around $400 million in the block.