THE government has asked ONGC to adopt a consortium approach instead of a joint venture with the Hindujas to pick up a participating interest in the $12.5-billion South Pars-12 gas project in Iran that would ensure long-term supply of 6-million-tonne liquefied natural gas (LNG) to India, a government official said.
"The ONGC Videsh board has cleared the investment proposal in principle. It will be sent to the government for approval soon,â€ a board member of ONGC said, requesting anonymity.
OVL may pick up 20% or more in the South Pars-12 field development project and 10% or more in the LNG terminal depending on its negotiations with Hindujas, he added.
Confirming the development, OVL managing director RS Butola said: â€œThe governmentâ€™s approval is required for investing in Iran and we are hopeful. We do not propose a joint venture with Hindujas for the projects.â€
In 2006, ONGC had entered into a pact with Hinduja group company Ashok Leyland Project Services (ALPS) to form JVs for investing in global oil and gas assets as well as LNG projects. The proposed JV had envisaged leveraging exploration & production (E&P) expertise of ONGC and the business-goodwill of the Hindujas in hydrocarbon-rich Middle East.
OVL, Hindujas and Petronet LNG have already entered into two â€œbroad agreementsâ€ with Iranian authorities for participation in development of the gas fields and LNG projects in Iran on December 1, 2009.
Iran, in turn, has agreed to supply minimum 6 mt LNG per annum on a long-term basis to India, an ONGC official who didnâ€™t wish to be named said. The deal was signed during the recent visit of Iranâ€™s deputy oil minister and managing director of National Iranian Oil Company (NIOC), Seifollah Jashnsaz.
A final agreement between Indian entities and Iranian companies is expected to be signed by the end of March 2010. As per the December agreement, Iran offered OVL and ALPS to jointly pick up a total 40% participating interest for developing South Pars 12 gas field.
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