ONGC, Petronet, Hindujas ink pact to develop Iran gas fields

State-controlled Oil & Natural Gas Corp and its overseas investment arm ONGC Videsh Ltd (OVL), in association with Ashok Leyland Projects Services Ltd (ALPS) and Petronet LNG, have entered into two broad enabling agreements with Iran for participating in the development of gas fields and liquefaction facilities in Iran, in return for assured minimum six million tonnes a year of LNG on long-term basis.

ONGC said in a statement from New Delhithat one of the strategic agreements would get OVL and ALPS, a Hinduja Group company, 40 per cent participating interest for development of South Pars 12 gas field in Iran. The other agreement offers 20 per cent equity in the liquefaction facilities of Iran LNG, with possible enhancement of equity up to 40 per cent to ONGC, OVL, ALPS and Petronet LNG.

According to ONGC's statement, the Iranian side has agreed to consider OVL's proposal to develop the Farsi block and bring the gas produced from the block discovered by OVL to India. The gas can be brought either through pipeline, LNG or swap arrangement. Iran has also agreed to resume detailed discussion on technical, commercial and contractual issues within three weeks in New Delhi, the statement said.

Investments in these ventures are to be securitised through deposit of sovereign funds of Iran with Indian banks, the statement said. Alternatively, the sale proceeds of crude oil supplies to Indian refineries may be used by Iran for such securitisation as collaterals.

India's participation in these projects would entitle supply of LNG up to a minimum of 6 mtpa on long-term basis, ONGC said, adding that ''this would be in addition to supply of condensate and other products as means for payback of Indian investment.''

According to ONGC, ''the agreements signed signify basic mutual understanding on the macro issues. Pursuant to detailed due diligence specific implementable agreement shall be concluded subject to approval of respective managements and/or Governments.''