HEADLINES:
November 18 2017
‘India may lose Farzad B gas field bid’
29 October 2017

Iran miffed as India not ‘flexible’ on pricing; quality of gas a concern, says petroleum ministry official

Even as Iranian government officials have said that India is close to losing its bid for the Farzad B gas field, Indian officials in the Petroleum Ministry downplayed the situation, saying it is all part of the negotiation process.

“They have been speaking to Russia and they have been speaking to us,” a senior official in the Petroleum Ministry told The Hindu on the condition of anonymity. “And this is not exactly a fresh bid. We have already been negotiating with them on all issues relating to Farzad B. It is just an issue of changing some numbers and some terms here and there. So when that happens, that doesn’t mean a fresh bid. In terms of the negotiation, there is continuity.”

A senior Iranian diplomat handling the negotiations said that they were disappointed that India had not shown “flexibility” in its bids for the Farzad B gasfield, and may have to offer it to others like Russian oil major Rosneft, which has put in a better bid for other parts of Farzad B.

“Given the lack of flexibility on pricing from India, we may be left with no choice, and India could lose the Farzad B project entirely,” the diplomat said.

The Petroleum Ministry official explained that the negotiations between India and Iran meant that the bids had been updated on a number of factors such as the time period of the contract, the depreciation element, or the taxation element, and the royalty payments.

‘Negotiations in place’

“The negotiation is as much in place as much as it ever was,” the official said. “It’s not as if the negotiation has ended and that a fresh one has started.”

He said that the main concern from the Indian side regarding the Farzad B field was the quality of gas and whether it was worth the investment.

“For any overseas investment, the internal rate of return (IRR) is very important,” the official said. “The IRR requirements have to be met, and it has to be recognised that Farzad B is the most difficult field because of the sour gas, and other considerations such as the impurities in the gas.”

While officials said the plan for the Chabahar Port was on course, with transport minister Nitin Gadkari promising to complete development of its berths by 2018-end, other discussions — on expanding banking facilities, offering India railroad projects, on the Iran-Pakistan-India (IPI) LNG pipelines, have not made much progress.

 

 

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