OVL may get 20% stake in 2 Iranian oil fields

India's flagship overseas firm ONGC Videsh Ltd is likely to get a 20 per cent stake in the Khusk and Hosseineieh oil fields in Iran on nomination basis.

Sources in the ministry of petroleum and natural gas said Iran has offered 20 per cent share (equal to 60,000 barrels per day or 3 million tonnes of crude oil annually) in the Khusk and Hosseineieh fields in exchange for India buying 5 million tonnes of LNG from Tehran.

OVL would be accommodated after Tehran selects operators of the two fields through a bidding round by September-end. OVL would have to participate in the bidding process.

Initially, Iran was keen on getting OVL on board the giant South Azadegan oil field but the operator Japan has yet to approve any participation of another party in the field.

"The National Iranian Oil Co could also consider offering 25 per cent from its share in the field (about 60,000 barrels per day) to OVL," they said.

As per indications, the Japanese prefer participation from one of the major oil multinationals in the project.

As regards finalisation of the term sheet for LNG imports, an Iranian delegation will visit India this month for further discussions. The term sheet is being finalised by the Indian Oil Corporation and GAIL (India) with the National Iranian Gas Export Co.

Till now, there had not been much progress in allocation of a suitable oil field by the Iranians to India on nomination in lieu of the LNG that the latter will purchase from Iran under a deal signed early last year.

India had extended the deadline for signing the sale and purchase agreement (SPA) with Iran for LNG imports and had threatened to scrap the MoU if Tehran did not provide a worthwhile discovered oil block in the next four months.

The two had agreed to finalise the SPA with the National Iranian Gas Export Co for purchase and import of LNG to India within nine months of signing the pact on May 13 last year.

Sources said New Delhi had given Iran time till July to offer a discovered block that would yield sufficient return to compensate the high LNG-cost, and if that did not happen, the MoU would be allowed to lapse.

The reason for India's aggressive stance was Iran's handing over of the South Azadegan field to Japan even after it had assured that the Indian firms would get 40 per cent along with a western oil major.

"Iran had offered us some other discovered and semi-discovered blocks but we did not find them attractive as they either required large investments or were low in yield," they said.