Mumbai: Iran has indicated that it may award rights to develop the 12.8 trillion cubic feet gas find in the country's Farsi block to a consortium led by ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corporation.

''We are assessing the commerciality of the finds. Our priority will be to give the development rights to ONGC," Iranian oil minister Gholam Hossein Nozari said on the sidelines of the 19th World Petroleum Congress in Madrid.

The OVL consortium had submitted a report on the commercial viability of the gas find, in December, and is awaiting a decision from the Iranian authorities to go ahead with the development.

The consortium of OVL, Indian Oil Corporation and Oil India Ltd has proposed to invest about $3 billion in bringing to production 12.8 TCF of recoverable gas reserves found last year at Iran's Farsi block, in the next 3-4 years.

The Iranian minister said his country was keen to have Indian firms invest in the oil and gas exploration in his country.

OVL-IOC-OIL consortium has a service contract for the Farsi block where they will be reimbursed 35 per cent over the $90 million investment they have made during the exploration phase.

If the consortium gets the developmental rights, they will be paid a 15 per cent rate of return over and above the investments they make.

The OVL consortium has made a proposal to Iran to liquefy the gas and ship it to India in form of liquefied natural gas. Tehran is evaluating the plan.

"The oil and gas will belong to National Iranian Oil Co (NIOC). They have the marketing rights and we have requested them to allocate the gas to us for converting it into LNG," an ONGC official said.

In the commercial viability report to NIOC, OVL, the operator of the field, put the least gas volume from the field at 9.48 TCF and the high-case estimate at 21.68 TCF. The find has also been independently assessed by Fugro Robertson Ltd of the UK and ONGC's Institute of Reservoir Studies. Recoverable reserves have been put at 12.8 TCF.

The official said that the block also has oil reserves that may be around one billion barrels in size. 

During exploration phase, the OVL-IOC-OIL consortium had struck crude oil in three wells in the Farsi block, 90 km off Bushehr port. It found gas in one well.

OVL and IOC have 40 per cent stake each in the Farsi block that was awarded to the consortium in 2002. OIL has the remaining 20 per cent.

Under the Iranian rules, project promoters are not allowed to take oil or gas out of the country. OVL had to fund all exploration operations, which would be reimbursed only after ascertaining the commercial viability.

According to the commercial viability report, even in the worst-case scenario of 9.48 TCF production, NIOC would earn a net cash of $71.792 trillion by producing 83 million barrels of condensate and 7.354 trillion cubic feet of gas over 30 years.

In return, OVL would get a 35 per cent rate of return on the investments in exploration and a 15 per cent remuneration fee on development of the discovered gas.

The Indian consortium had committed a minimum investment in exploration phase of $27 million with a work programme which included seismic survey and drilling of four wells.