ONGC Videsh Proposes $5 Billion Investment in Iran's Farzad Gas Field

Strategic Insights -

A consortium of ONGC Videsh Ltd, Indian Oil Corp (IOC), and Oil India Ltd (OIL) has submitted a development plan to Iranian authorities for the Farzad gas field, which they discovered in the Farsi block in 2002. The proposed investment of around $5 billion is expected to bring the massive gas field into production within 3-4 years. The discovery, named Farzad gas field, is estimated to hold inplace reserves of up to 21.68 trillion cubic feet, with recoverable reserves of 12.8 trillion cubic feet.

Key Takeaways:

  • ONGC Videsh Ltd and its partners Indian Oil Corp (IOC) and Oil India Ltd (OIL) have proposed an investment of approximately $5 billion in developing the Farzad gas field in Iran.
  • The investment is expected to yield a 15% rate of return over and above the investments made by the consortium.
  • The Farzad gas field is estimated to hold inplace reserves of up to 21.68 trillion cubic feet, with recoverable reserves of 12.8 trillion cubic feet.
  • The consortium has a 40% stake in the 3,500 sq km Farsi offshore block, with Indian Oil Corp (IOC) and Oil India Ltd (OIL) holding 40% and 20% stakes, respectively.
  • ONGC Videsh Ltd and its partners have found oil on the block, with estimated reserves of up to one billion barrels, but Iran has yet to approve the commerciality of the oil find.
  • The Iranian authorities have not yet responded to the development plan submitted by the consortium in June 2009.

Statistics:

  • Estimated inplace reserves of the Farzad gas field: up to 21.68 trillion cubic feet
  • Estimated recoverable reserves of the Farzad gas field: 12.8 trillion cubic feet
  • Proposed investment by ONGC Videsh Ltd and its partners: approximately $5 billion
  • Expected rate of return for the consortium: 15% over and above investments
  • Stake of ONGC Videsh Ltd, Indian Oil Corp (IOC), and Oil India Ltd (OIL) in the Farsi offshore block: 40%, 40%, and 20%, respectively

Sources:

  • Source 1: PTI, June 2009
  • Source 2: Official website of ONGC Videsh Ltd, Indian Oil Corp (IOC), and Oil India Ltd (OIL)