The petroleum ministry feels that the Indian Oil Corporation's investment plan for the South Pars gas bowl in Iran may not be as attractive as another barter deal being negotiated by the Indian government.
Ministry sources said that IOC's memorandum of understanding with the Iranian government was just preliminary in nature and was yet to get the ministry approval. Besides, IOC and Petropas, the Iranian company with a majority share in the gas bowl, will need a formal approval from the state-owned National Iranian Oil Company.
The government has been bargaining with Iran for operatorship of discovered and semi-discovered fields in exchange for India buying gas from Iran.
"While the IOC deal with Petropars requires a huge investment, the barter deal will require lesser money since the fields will be at least partially developed," said an official.
Among the fields being negotiated by India is the Khush Husseinieh for which the government wants to adopt a consortium approach. The MoU signed on Monday envisages 40 per cent investment in the field. IOC said on Tuesday that the $3-billion estimated investment was for the total project and not the company's share.
"It will get shaped up only after preparation of a detailed feasibility report," said a company statement.
IOC also stated that the MoU with Petropars was only for development of a joint proposal to be submitted to NIOC for an integrated project of development of the gas field and setting up of LNG liquification facilities.
The MoU was executed after discussions between Petroleum Minister Mani Shankar Aiyar and Iranian Energy Minister Zangeneh at Opec meeting held in Vienna recently.
Iran does not allow foreign companies to own oil and gas fields. Companies can offer a rate of return on their investment through a negotiated oil and gas price. With gas being more difficult to sell than oil due to the nature of investment required, Iran is more keen on India buying its gas either in liquefied form or as piped gas.
The deal if it comes through will translate into 9 million tonne per annum gas for IOC which will also be picking 6 per cent equity in a liquefication plant in Iran.
The remaining 60 per cent in the South Pars field will be held by Petropas, jointly owned by state-owned NIOC and Industrial Development and Renovation Organisation Pension Fund.
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