India has lost its $3-billion bet on Iran regarding the giant Farzad-B gas field in Farsi block. The Indian state run oil companies discovered this asset back in 2008 and since then the negotiations were being carried out by top leadership of both the countries.
The National Iranian oil Company cracked the deal in $1.7 billion after Tehran had rejected India’s $2-billion offer. The Farzad-B is the second Indian proposal that was rejected even after the involvement of top leadership of both the countries.
ONGC Videsh was leading the Indian consortium that invested $400 million and signed the exploration agreement in 2002. However, Iran allowed the agreement to expire in 2009, just a year after the discovery of Farzad-B.
The Consortium was still trying to find out the ways to recover the investment. Since then several deadlines for the deal were missed. In addition to it Tehran also declared Indian offer as unsatisfactory or sometimes added new conditions as well.
It was reported on May 30, 2017 that Iran was planning to replace Indian consortium with the oil companies of other countries. On June 7, 2017 it was revealed that Iran was signing an agreement for Farzad-B with Russia’s Gazprom.
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Indian officials informed that they were well aware of Iran’s intention after Tehran failed to respond to the field development plan submitted by the Consortium in March 2017. Owing to this delay India asked its refiners to reduce the oil import from Iran by 20%.
India has then secured the waiver from Barack Obama administration and was one of the major buyers of oil from Iran. But then Tehran reduced the payment window from 90 days to 60 days and the discount on ocean freight was also cut down from 80% to 60%.
Regarding Iran’s deal with Gazprom, India’s oil minister Dharmendra Pradhan said on June 20, 2017:
“I need assurance on my investment… Iran is a sovereign country and we expect that since we were with it during its challenging days, Iran should reciprocate. We will only invest if we see returns.”