India to invest $27 M in Iranian oil block

Tuesday, 31 December 2002, 08:00 Hrs
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A consortium of three state-owned Indian companies has signed an exploration contract worth $27 million for an Iranian offshore oil and gas block in the Persian Gulf.

NEW DELHI: This is the first exploration contract bagged by India in Iran since the oil sector was nationalised in the 1970s.

The consortium comprises ONGC Videsh Ltd (OVL), which is the overseas arm of Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IndianOil) and Oil India Ltd. (OIL).

On December 25, OVL (40 percent stake), IndianOil (40 percent) and Oil India Ltd. (OIL) (20 percent) signed the contract with the National Iranian Oil Company (NIOC) for the Farsi oil and gas block.

"We have committed to invest $27 million for exploration activities over the next three years," Atul Chandra, OVL managing director, told IANS.

Earlier, ONGC had a 16.5 percent stake in two Iranian oil fields Raksh and Rostam, which it had discovered together with Philips Petroleum of the U.S. and Agip Petroleum of Italy.

NIOC had offered 13 blocks for exploration service contracts to international oil companies. The OVL consortium bagged the Farsi oil block contract after beating stiff competition from two European consortiums and Indian exploration and petroleum major Reliance Industries.

The Farsi exploration block already has two oil discovery wells and is estimated to have a hydrocarbon (oil and gas) potential in excess of 500 million barrels of crude.

"With two exploration wells having proved evidence of oil, we are planning to carry out further seismic surveys of the field before undertaking drilling activity," said Chandra.

Covering an area of over 3,000 sq km in the Persian Gulf near Bandar Abbas, the block has water depth in the range of 65 feet to 295 feet.

"Within 90 days, we plan to invite tenders for processing the available old seismic data. After that we will be inviting fresh tenders within four months for undertaking further seismic surveys. By end of 2003, we will be ready to undertake drilling activities for around three wells," said Chandra.

Within three years, OVL hopes to complete drilling activities and submit the development plan to NIOC, which will then invite fresh bids for development of the oil and gas field.

"We plan to bid for the next stage of exploration and development of the Farsi oil and gas block when Iran invites the bids. Under the terms of the contract, we would have an assured 30 percent participating interest in the development project in the future, whether we bag the second stage contract or not," said Chandra.

Unlike India, Russia and several other countries, Iranian laws do not permit equity stake to foreign developers. Instead they are given returns on investment in the form of oil and gas.

OVL is meanwhile hopeful of a favourable response from the Sudan government by the middle of January to its $720 million deal to take the 25 percent equity stake of Canada's Talisman Energy Inc in the Greater Nile Oil Project.

Other partners in the project are the China National Petroleum Corporation with 40 percent, Malaysia's Petronas Carigali Overseas (30 percent) and the Sudan National Oil Company with five percent stake.

India hopes to get around three million tonnes of crude oil annually from a producing oil field in Muglad Basin, around 700 km south-west of Khartoum, as its 25 percent equity share from the field once the deal receives the Sudan government's approval.
Source: IANS

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