Iran takes over oilfield abandoned by Indian explorers

Iran has transferred to a local company the development of an offshore oilfield that was granted to ONGC Videsh Ltd, the overseas arm of India's government-owned explorer Oil & Natural Gas Corp, along with two other state-owned partners.

ONGC Videsh and its partners Indian Oil Corporation (IOC) and Oil India Ltd (OIL) had, in 2009, abandoned plans to develop the Binaloud oil find in the Farsi offshore block. With its own estimates of reserve of one billion barrels, ONGC found production commercially unviable.

However, the Iranian Offshore Oil Co (IOOC) has decided that production of heavy crude oil from the field is possible in the near future, Iran's semi-official news agency Mehr reported.

According to the IOOC estimate, Binaloud holds about 3.5 billion barrels of oil in place, more than three times ONGC's estimate.

Jalal Mousavi, head of the company's research and development bureau, said that with 14-degree API gravity, production is viable.

"Even though preliminary studies by ONGC evaluated the field as uneconomical, [our] studies and examinations show that with different approaches we can produce from the field," Mousavi said.

The OVL-IOC-OIL joint venture had, in 2006, made an oil discovery in the Farsi offshore block, which was later named Binaloud. The discovery was thought commercially unviable primarily due to high sulphur content in the oil.

 When the discovery was made, OVL was granted priority to develop it as per Iran's model for oil exploration and development. The company's subsequent decision to abandon Binaloud, however, made it ineligible to perform further exploration in the offshore licence area, opening the way for Tehran to step in.

Indian explorers remain in the contention for the Farzad-B gas find in the same Farsi block; but US-led Western sanctions on Iranian oil have hampered the signing of any firm contracts.