OVL gets approval from Iran for study on gas block

Nov 19, 2008 01:00 AM

ONGC Videsh Ltd. (OVL), the overseas arm of the state-run ONGC, has received approval from National Iranian Oil Company (NIOC) on the feasibility report of its gas discovery in the Farsi block.
The offshore block, which is in the Persian Gulf, is said to contain gas reserves of 12.5 tcf and oil reserves of over 1 bn barrels. To put this in perspective, this is more than Reliance Industries Ltd.'s (RIL's) giant gas discovery in the Krishna Godavari (KG) basin off the Andhra coast.

Confirming the development, an ONGC director told: "NIOC has approved the commerciality report of the gas discovery. We have invested close to a billion dollars in the block for exploration. The development of the block needs another $ 3 bn."
OVL has submitted the report in December 2007.

OVL is the operator of the block with a 40 % stake, while India's biggest refiner Indian Oil Corp (IOC) holds another 40 %. Oil India holds the remaining 20 %. The block, measuring over 3,500 sq km, was awarded to the Indianconsortium in 2002.
"We will now start working on the development of the block, which may take 3-4 years," said an official from another consortium partner.

Iran has attracted interest from Indian and Chinese firms which are keen to tap the world's second-largest reserves of oil and gas. Companies from these two countries are less susceptible to western pressure over Tehran's nuclear programme compared to companies from other countries.
India imports nearly 70 % of its oil requirements. Indian 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 India, acquiring equity in oil and gas assets overseas is being seen as one of the important components of enhancing energy security.

Meanwhile, India and Iran are yet to sort out issues relating to the long-pending $ 8 bn Iran-Pakistan-India (IPI) pipeline.
The problem relates to differences over pricing and delivery point of the gas from Iran.

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