July 4, 2008

Iran May Allow ONGC to Develop Gas Find

By Sanjay Dutta

MADRID: Faced with the Left's heat over its proposed civilian nuclear deal with the US, the government's renewed thrust on closer energy ties with Iran and return to the negotiating table for a $7 billion energy lifeline promises to put more collateral returns in pipeline for New Delhi.

On Tuesday, Teheran said it was willing to consider giving India's flagship explorer, ONGC, the right to develop the gas find in the Farsi field, estimated to have a whopping 12.8 tcf (trillion cubic feet) of reserves, and invite Gas Authority of India Limited (GAIL) for setting up a petrochem plant as well as roll out auto gas services.

"We are (currently) assessing the commerciality of the finds. Our priority will be to give the development rights to ONGC," Iran's oil minister Gholam Hossein Nozari said after meeting his Indian counterpart Murli Deora here on the sidelines of the 19th World Petroleum Congress.

Tuesday's meeting was the second in a fortnight for the two leaders. The two oil ministers had met on the sidelines of the meeting of key oil producers and consumers called by Saudi Arabia in Jeddah. That meeting had broken the ice over stalled talks on plans to wheel gas from Iran through a pipeline across Pakistan. India had agreed to resume talks on resolving needling issues of the project between the two countries.

After meeting Deora on Tuesday again, Nozari said his country was keen on having Indian firms invest in oil and gas exploration in his country. He also said Iran would be willing to offer India half of the liquified natural gas (LNG) from the field if the Indian partner invests twice its equity, or 100%. The Iran oil minister Gholam also that the said the pipeline talks were on track and he expected to conclude agreements on the pipeline as soon as some "pending issues were resolved". The assurances from the Iranian minister would go some way in blunting the Left's efforts to alienate the Congress from its traditional supporters in the minority community.

But, sceptics say Iran has its own reasons to make offers to India, which is among the very few countries that are willing or can invest in the Persian Gulf nation due to existing US sanctions. As a pointer, they say, there is no word yet from Iran on the $40 billion deal it had signed with a consortium of Indian Oil, GAIL and Bharat Petroleum.

The Farsi gas was discovered last year by a consortium of ONGC Videsh Ltd (OVL), ONGC's overseas investment arm, flagship refiner Indian Oil Corporation (IOC) and Oil India Ltd (OIL).

The ONGC-led consortium has proposed to invest about $3 billion in bringing to production the 12.8 tcf recoverable gas reserves.

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