ONGC, Hindujas may ink pact to dev oil, gas fields in Iran

Oil and Natural Gas Corporation and its partner Hinduja Group may sign a multi-billion dollar deal next month for developing oil and gas fields in Iran.

The ONGC-Hinduja combine would meet Iranian the authorities around mid-April to finalise 'participating agreement' for the development of Phase-12 of the giant South Pars gas field and South Azadegan oilfield, ONGC Chairman and Managing Director R S Sharma told reporters in New Delhi on Wednesday.

The consortia was in Tehran earlier this month to do technical due diligence for the two fields but ended up being shown old data for the Phase-12 and no data of South Azadegan.

"The next meeting is scheduled tentatively around mid-April... we hope to sign participating agreement (for the two fields) then," Sharma said.

The development of the two fields are part of the $20 billion investment ONGC and Hindujas have planned together.

Hindujas, together with state-run ONGC's overseas arm ONGC Videsh Ltd, are to invest $8 billion in developing the onshore South Azadegan oilfield and Phase-12 of the offshore South Pars gas field.

The two firms would court Switzerland-registered Naftiran Intertrade Co (NICO), a unit of National Iranian Oil Co for the deal, he said.

NICO has been offered a stake in the 15 million tons oil refinery, one million tons petrochemical plant and 7.5 million tons LNG receipt facility planned by Hinduja-ONGC at an investment of over $10 billion at either Kakinada in Andhra Pradesh or Mangalore in Karnataka.

Petropars, the subsidiary of NICO that has been awarded development rights for South Pars Phase-12, and PetroIran, another subsidiary of NICO owns 90 per cent development rights of Azadegan oilfield.

The Indian consortium of Hinduja Group and OVL will get 60 per cent stake in development of South Pars Phase-12 and just over 50 per cent in Azadegan field, sources said.

Azadegan field will produce 150,000 barrels per day of oil in first phase that would double subsequently, while South Pars Phase-12 would produce 12 million tons of gas that would be converted into LNG at a $2-billion facility.

Hinduja-ONGC have sought supply commitment for the entire oil produced from Azadegan field and 7.5 million tons of LNG from South Pars Phase-12.

The development of Phase-12 of South Pars field and the Azadegan field would cost $8eight billion, while putting up a facility to liquefy the gas for export as LNG another $2 billion, sources close to the negotiations among the three companies said.

In India, the consortium plans to invest $5 billion for setting up a 15 million tons refinery, $1 billion in LNG terminal and $3-4 billion in power and petrochemical plants.

Iran does not give companies a stake in its oilfields but signs buyback agreements where companies hand over operations of fields to National Iranian Oil Company after development and then receive payments from oil or gas production for a few years to cover their investment.

Sources said Hinduja-OVL would get a fixed percentage over their investment as remuneration for development of the oil and gas fields. In return, the Indians have sought supply commitment to fire their plants back home.

OVL and Ashok Leyland Project Services Ltd - a unit of Hinduja Group - had last month signed a MoU for collaboration on the Iranian project. Hinduja Group had previously secured an agreement with NICO for the two projects.