Iran to sign $2.2 billion deal to develop Farzad gas field: Zangeneh

Minister of Petroleum Bijan Zangeneh says Iran will sign a deal worth $2.2 billion to develop the offshore Farzad B gas field.

Zangeneh, addressing an open parliament session in Tehran on Tuesday, did not give a date for the signing or the parties involved in the deal.

The field is estimated to hold 22 trillion cubic feet (tcf) of reserves, of which 16 tcf are deemed recoverable. “The first phase of Farzad, worth $2.2 billion, will be signed in the future,” Zangeneh said.

India, whose firms discovered the field in the Persian Gulf in 2008, had long coveted the project, but its dragged-out negotiations with Iran never led to a deal, either because of sanctions or differences over development rights.

The last plan by the Indians dates back to April 2018 when they were supposed to offer a $3-4 billion development package for the Farzad B gas field.

At the time, reports said Iran had reduced the scope of the development plan and asked India to submit a revised proposal. Indian companies had initially submitted a $11-billion development proposal that covered the development of upstream activities and downstream infrastructure.  

Zangeneh has said the Indians were apparently fearful of US sanctions, refusing to join the project even after Iran offered an unprecedented level of flexibility.

“We gave them great concessions… but it seems the Indians did not sign a contract for developing the field because of the sanctions,” he said last year.

India’s hardball tactic with Iran backfires

The Indians have been demanding special treatment on developing the offshore Farzad B gas field which they discovered in 2008.

India was the second largest buyer of Iranian oil after China, but the country stopped imports after the Trump administration refused to extend exemption from Iran sanctions in May 2019.

Managing Director of National Iranian Oil Company (NIOC) Masoud Karbasian said in July the operator of the Farzad B field had been decided and the deal for its development was about to be signed soon.

Zangeneh has said Iran’s Patropars has been awarded the engineering, exploration and basic design contract for the field's development.

In January, Petropars was also awarded developing phase 11 of South Pars, the world’s largest gas field, after the withdrawal of French oil major Total and the China National Petroleum Corp (CNPC).

According to the Iranian Ministry of Petroleum's Shana news outlet, the development of Farzad will cost $5.2 billion, including $2.2 billion in Farzad B’s first phase, in order to produce one billion cubic feet a day of gas.

US sanctions have been a boon to domestic manufacturers who have thrived under the new situation through mobilizing their resources to fulfill some of the tasks which were an exclusive competence of foreign companies before. 

In July, Petropars won a contract to develop South Azadegan, one of Iran’s largest oilfields in the southwestern Khuzestan province, believed to have nearly 27 billion barrels of oil in place.

Zangeneh said on Tuesday Iran needs $200 billion of investment in its oil industry. "$120 billion of this will come from domestic sources and $80 billion from foreign sources."

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