Reuters: Iran has offered Indian firms a 40 percent interest in the development phase of its largest gas field in return for six million tonnes of liquefied natural gas (LNG), the managing director of National Iranian Oil Co said on Tuesday. By Nidhi Verma
NEW DELHI, Dec 1 (Reuters) – Iran has offered Indian firms a 40 percent interest in the development phase of its largest gas field in return for six million tonnes of liquefied natural gas (LNG), the managing director of National Iranian Oil Co said on Tuesday.
With Western firms wary of investing in the Islamic state due to its nuclear row with the United States, Tehran has increasingly been looking towards energy-hungry Asian countries for investment to help exploit its vast gas and oil reserves.
State-run Oil and Natural Gas Corp and Hinduja Group would own 20 percent interest each in South Pars Phase 12 project, Seifollah Jashnsaz told reporters after a second day of talks with Indian companies on investments in Iran.
South Pars, the world's largest reservoir of gas, is shared by Iran and Qatar. The Iranian part is divided into 24 phases.
Jashnsaz said ONGC, Hinduja Group and India's Petronet LNG would buy a stake in Iran LNG Co.
The investment in both South Pars development and Iran LNG would allow India to receive up to 6 million tonnes of LNG every year, Jashnsaz said, adding development of South Pars Phase 12 would cost $7.5 billion.
The deal has to be cleared by their respective governments.
Iran has the world's second largest gas reserves, almost 16 percent of the world's total, but currently has no major net exports partly because U.S. and U.N. sanctions have deterred investment by Western firms with expertise and technology.
Analysts say it lacks the technology to develop LNG terminals. ONGC chairman R. S. Sharma said NIOC subsidiary NAFTIRAN Intertrade Co will deposit funds with Indian banks that could serve us collateral and help Indian firms raise money for investment in Iranian assets.
"Another option is that payments to be made by Indian refiners for crude purchases can also be used as collateral. Details have to be firmed up," he said, adding India imported 23 million tonnes of crude in the last financial year from Iran.
He said the deals will be finalised after obtaining government approvals by both countries.
Jashnsaz also said that Iran has agreed to give development rights for Farsi offshore block to Indian firms – ONGC, Indian Oil Corp and Oil India Ltd.
He said next round of talks between India, Pakistan and Iran on transnational pipeline will be held this month in New Delhi.
"Next week India will specify the date of negotiation and we will restart negotiation in New Delhi. It will be three-angle meeting with India, Pakistan and Iran," he said (Editing by James Jukwey)