<article><p class="lead">Iran's state-owned NIOC subsidiary Petropars will develop the offshore Farzad-B gas field that straddles the country's maritime border with Saudi Arabia, putting an end to Indian state-owned ONGC's long-standing hopes of landing the lucrative contract.</p><p>Petropars, an upstream contracting company, signed the $1.87bn buyback contract with NIOC today. The project targets production of around 10.22bn m³/yr of sour gas from eight wells over five years.</p><p>The gas produced will be sent for processing at facilities in Kangan, in the southern Bushehr province, and the gas condensate will be delivered to South Pars processing facilities, also in Bushehr, after separation. NIOC unit POGC, which operates the supergiant South Pars gas field, estimates that Farzad-B holds around 23 trillion ft³ (651bn m³) of gas in place, and "around 5,000 bl of gas per bn ft³" — which would equal 115mn bl of condensate.</p><p>This award comes as part of a wider push by Iran to press ahead with development of key upstream assets, particularly those on its borders, without help from foreign oil and gas companies that put an end to their interest in Iran after the US reimposed sanctions on Tehran in 2018. In <a href="https://direct.argusmedia.com/newsandanalysis/article/2132887">the past year</a>, Iran has awarded more than 10 upstream development contracts to domestic companies aimed at raising output capacity at a host of producing fields, among them South Azadegan and Yaran.</p><p>Prior to 2018, India's ONGC Videsh had been pushing to win the contract for Farzad-B, which it discovered in 2008 as part of a consortium of Indian firms. In 2017 an ONGC-led consortium proposed an $11bn plan to develop the field and build a linked LNG-export facility, but this fell through over a disagreement about gas prices. India was willing to pay $2.30-4/mn Btu, depending on crude prices; Tehran demanded a much higher price, closer to what India paid Qatar for LNG.</p><p>The consortium returned in 2018 with a proposal for upstream development with an investment of around $6.2bn. Tehran welcomed this and made positive noises about finalising the deal within a matter of months, but the return of sanctions killed all momentum and resulted in the complete breakdown of the talks.</p><p>A potential lifting of sanctions on Iran, which has been under discussion between Iranian, US and other officials in Vienna since the start of April, could have encouraged ONGC to make another play for the contract had it not already been awarded. Iran at some point also invited Russia's state-controlled Gazprom to participate in the project, but those talks were also prematurely cut short by the returning US sanctions in 2018.</p><p class="bylines">By Nader Itayim</p></article>
