ONGC Videsh Ltd and its partners Indian Oil Corporation and Oil India Ltd are likely to invest about $4 billion to start production from a massive gas field they discovered in offshore Iran, in the next 3-4 years.
"Iran had in September 2008 approved the commerciality of the discovery and the three partners are now in the process of preparing a development plan. Investments may be in the range of $4 billion," an ONGC official said.
The discovery, which was subsequently named Farzad gas field, has inplace reserves of up to 21.68 trillion cubic feet, of which recoverable reserves may be 12.8 Tcf.
The Indian firms want to liquefy the gas and ship it to India in the form of liquefied natural gas.
"The oil and gas will belong to the National Iranian Oil Co. They have the marketing rights and we have requested them to allocate the gas to us for converting it into LNG," he said.
OVL, which holds 40 per cent interest and is the operator of the block, has also submitted a feasibility report for the one billion barrel oil discovery it made in 2006.
Oil was found in the BB structure in 2006, the discovery has been named Binaloud.
"Feasibility report of the oilfield has been submitted to the National Iranian Oil Company, Iran, on November 26, 2008,"he said.
During exploration phase, the OVL-IOC-OIL consortium had struck crude oil in three wells in the Farsi block, 90 km off Bushehr port. It found gas in one well, the official said.
OVL, the overseas arm of state-run Oil and Natural Gas Corporation, Indian Oil Corporation and Oil India Limited have a service contract for the Farsi block where they will be reimbursed 35 per cent plus $90 million investment they made during the exploration phase.
If the consortia gets the developmental rights, they will be paid a 15 per cent rate of return over and above the investments they make.
In the commercial viability report to NIOC, OVL -- the operator of the field -- has said the least gas volume was 9.48 Tcf and the high-case estimate was 21.68 Tcf after independent studies by Fugro Robertson Ltd of the UK and ONGC's Institute of Reservoir Studies.
OVL and IOC have 40 per cent stake each in the 3,500 sq km Farsi offshore block that was awarded to the consortium in 2002. OIL has the remaining 20 per cent.
Under Iranian rules, the project promoters are not allowed to take oil or gas out of the country.
OVL had to fund all exploration operations that would be reimbursed only after ascertaining commerciality.
The commerciality report establishes production economics even in the worst-case scenario of 9.48 Tcf where NIOC would earn a net cash of $71.792 trillion by producing 83 million barrels of condensate and 7.354 trillion cubic feet of gas over 30 years.
