Iran team to ink LNG, oil field equity deal

A 10-member Iranian delegation led by its deputy oil minister Mohammad Hadi Nejad Hosseinian is on a two-day visit to Delhi and a broader ag...

A 10-member Iranian delegation led by its deputy oil minister Mohammad Hadi Nejad Hosseinian is on a two-day visit to Delhi and a broader agreement is expected to be signed between the two sides on Tuesday, on the price for sale of 5 million tonnes per annum (MTPA) of LNG to India along with a 20 per cent equity offering by Iran in its Kushk-Husseinieh oil field, a huge discovered oil field producing oil at the rate of 300,000 barrels per day (BPD).

A meeting has also been scheduled between Petroleum Minister Mani Shankar Aiyar and Hosseinian for Monday morning. Discussions on the deepwater gas pipeline from Iran to India based on the final report of Snamprogetti, expected by September/October, are also expected to take place between the two sides. Giving details of the agenda for this meeting, senior petroleum ministry officials said various rounds of discussions on the term sheet for LNG sales purchase agreement (SPA) have already been held by a joint team of GAIL (India) Limited and Indian Oil Corporation (IOC) with the National Iranian Gas Exporting Company (NIGEC), headed by R. Javedi.

Officials said that, based on the broad understanding reached in respect of various issues, it has now been agreed to commence negotiations for finalisation of the LNG SPA. The pricing issue is also likely to be decided in this meeting. Officials said NIGEC has agreed to give GAIL/IOC the right to take 20 per cent equity in the LNG liquefaction plant, for purchasing 5 MTPA of LNG. The Iranians are hopeful that their first LNG terminal would come up by 2007. The expansion of the LNG terminal of Petronet LNG Limited (PLL), from 5-10 MTPA will be utilised for receiving the LNG and regassifying the same.

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On the exploration front, the Iranians have asked ONGC Videsh Limited (OVL) to submit a bid for acquiring 20 per cent equity in the Kushk-Husseinieh oil field by September. ‘‘While as per Iranian laws, OVL will bid for this field, Iranians have assured that they will assign a 20 per cent equity to OVL out of their equity of 50 per cent,’’ a senior oil company official said.

In the area of petrochemicals, participation of Indian Oil Corporation (IOC) in the 10th Olefinic project, a large petrochemical project at advanced stage of implementation, will be finalised. The formation of a joint venture between GAIL and Iranian Fuel Conservation Organisation (IFCO) for undertaking CNG projects in Iran will also be discussed.

In all the areas of co-operation, it has been agreed that a consortium approach will be followed. For the 5 MTPA import of LNG, GAIL will take the lead with a 40 per cent stake in the project, followed by IOC with 35 per cent stake and ONGC and OVL combine at 25 per cent. This will entitle GAIL to a share of 2 MTPA of LNG, while IOC and ONGC will get a 1.75 MTPA and 1.25 MTPA respectively.

In the case of exploration projects, OVL will take the lead with 40 per cent equity followed by IOC and GAIL at 25 per cent each, and Oil India Limited at 10 per cent. For petrochemicals, the shareholding will be between IOC and GAIL, with the latter’s share not increasing beyond 50 per cent.

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The Iranian delegation comprises National Company of Gas Exploration’s managing director Ruknuddin Jawadi; head of Oil and Gas Corporation, Mohammed Raza Bonakdar Hashmi; International Petrochemical Company’s (IPC) managing director Mohammad Hadi Rahwari; IPC’s director (foreign investment) Hasan Ahamadian; IPC’s marketing director Mansoor Hazi Azeem; deputy director and in-charge, support, exploration directorate, Hossein Roshnudil; Oil Engineering and Development Company’s advisor Hamd Amirjani; engineering expert Saeed Pak Seresht ad Mohammad Mahmondi from Iranian Fuel Conservation Organisation.