Iran approves commerciality report of ONGC Videsh gas block

Nov 02, 2008 01:00 AM

The gas commerciality report of ONGC Videsh Ltd (OVL) and its consortium partners on the discovery made in Iran's Farsi offshore block has got the nod of the National Iranian Oil Corporation (NIOC). Official sources told that NIOC has formally accepted the commerciality report of the gas discovery.
With this, Indian companies can now work towards the development of the gas field.

Iran follows a bidding mechanism for giving development rights. According to estimates, the block holds recoverable gas reserves of about 12.5 tcf. In December last year, OVL and its partners Indian Oil Corporation (IOC) and Oil India Ltd (OIL) had submitted the commerciality report for the approval of NIOC.
The Indian companies plan to invest close to $ 3 bn to develop the gas field. The Indian companies have invested $ 90 mm so far in the field.

Though the reservoir is mainly gas, OVL and its consortium have also struck oil in the field. The block is estimated to hold in place reserves of more than 1 bn barrels of oil.
This was the first block where OVL, as an operator, had struck oil and gas.

Bagging the bid
OVL had won the bid for the 3,500-sq-km Farsi offshore block in early 2002 and signed the exploration service contract (ESC) with NIOC on December 25, 2002. OVL is the operator of the block with a 40 % participating interest, while IOC holds another 40 % and the remaining 20 % stake is held by Oil India.
India imports nearly 70 % of its oil requirements. And domestic oil companies have been intensifying their efforts to boost oil production abroad to make up for stagnating local output. In view of the unfavourable demand-supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is being seen as one of the important components of enhancing energy security, sources said.

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