IOC's Iran JV in troubled waters

NEW DELHI: India’s petroleum sector deals with Iran seem to be jinxed. Even as the fate of LNG import and the Iran-Pakistan-India (IPI) pipeline project remains uncertain, IOC’s proposed joint venture with Iranian oil firm Petropars is heading for trouble.

The proposal for developing an LNG project in Iran through a joint venture is likely to be terminated as the validity of the MoU ends on October 31.

Despite several reminders, the Iranian side is silent on the issue, a source in IOC said. According to the proposal, IOC and Petropars signed an MoU in November 2004 for jointly developing an integrated LNG project in Iran.

The LNG project also included upstream facilities and liquification units. As per the plan, the JV partners sought National Iranian Oil Company’s (NIOC) in-principle approval for allocating them gas producing blocks in one of the phases in the South Pars fields. Petropars is a wholly-owned subsidiary of NIOC.

“The upstream facilities, to be developed under a buy back arrangement through a service contract with NIOC, shall be designed to produce adequate quantity of well-head fluid to produce 9 million tonnes of LNG per year in the LNG facility,” the source said.

It is learnt that bulk of the LNG produced in the proposed Iranian project was meant for India. The project was to be ready for commercial production in about 58 months from the date of signing of the service contract with NIOC for upstream facilities.

An IOC official has confirmed that “IOC has been following up for approval of the proposal through various channels including through our partners Petropars and also directly with NIOC.” It is learnt that the Iranian side had assured IOC-Petropars combine to allocate blocks from the North Pars fields on nomination basis as the South Pars fields have already been allocated to various parties.