OVL consortium to invest $3 billion in Iran gas block

Mumbai: ONGC Videsh Ltd, the overseas arm of public sector oil explorer Oil and Natural as Company Ltd (ONGC) along with state-run Indian Oil Corp and Oil India Ltd proposes to invest about $3 billion to develop gas fields in Iran's Farsi block.

The Farsi gas bloc is estimated to hold recoverable gas reserves of 12.8 trillion cubic feet.

The consortium, which found in-place reserves of up to 21.68 TCF in December, had submitted a viability report to the Iranian authorities. It is awaiting a decision from the Iranian authorities to go ahead with the development.

"So far, we have invested $90 million and if we are allowed to develop the field, we would be investing around $3 billion," an IOC official who did not wish to be identified, said.

ONGC and IOC each hold a 40 per cent participating interest in the Farsi block, while Oil India Ltd has the rest.

Iran is likely to take 1-2 years to decide on awarding the development.

OVL, IOC and OIL have a service contract for the Farsi block where they will be reimbursed 35 per cent over and above the $90-million investment they have made in the exploration phase.

If the consortium gets the developmental rights, they will be paid a 15 per cent rate of return over and above the investments they make.