In a major breakthrough, Oil and Natural Gas Corporation (ONGC) on Tuesday signed agreements to pick up stake in a giant gas field and a liquefied natural gas (LNG) plant in Iran, which also awarded the rights to develop a gas discovery it made in the Persian Gulf two years ago.

ONGC Videsh Ltd. (OVL) and the Hinduja Group signed agreements to take 40 per cent interest in the $7.5-billion, Phase 12 of the gigantic South Pars gas field, Iran’s Deputy Oil Minister and Managing Director of National Iranian Oil Co (NIOC) Seifollah Jashnsaz said.

Also, the two, along with Petronet LNG, would get 20 per cent of Iran LNG’s project that will convert the gas from South Pars Phase-12 (SP-12) into liquefied natural gas for exports. The Indian companies will get up to 6 million tonnes or 60 per cent of the liquefied gas that Iran LNG will produce in return.

Mr. Jashnsaz said that considering the ‘good work’ done by OVL in discovering a big gas field in the Farsi block, Iran had decided to award it the right to develop the field. OVL, along with Indian Oil Corporation and Oil India, will invest $5-5.5 billion in developing the Farzad-B gas field. While ONGC Chairman and Managing Director R. S. Sharma said the distribution of stake in SP-12 between OVL and the Hinduja Group was not decided, Hinduja Group co-Chairman GP Hinduja said it would be split equally.

Mr. Hinduja said in the Iran LNG project his firm would have 10 per cent and the remaining would be shared by ONGC/OVL and Petronet. Sources said Iran was seeking $2 billion as advance money for the projects which ONGC flatly declined.

Instead, a securitisation mechanism was agreed to secure the investments made by the Indian firms. Switzerland-based Naftiran Intertrade Co (NICO), a subsidiary of NICO, will either pledge the foreign exchange reserves it has with an Indian bank or a charge would be created on the revenues that flow to Iran for the crude oil that Indian refiners imports.

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