ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), will bid for development rights of Iran's giant South Azadegan Oilfield in direct competition with the likes of global giants like Shell, France's Total, Petronas of Malaysia and Russia's Gazprom.

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OVL will also rework the USD 6.2 billion cost of developing the Farzad-B gas field in the Persian Gulf, which it had discovered a decade back, to get Iran to award rights of the field to it, sources privy to the development said.

OVL is one of the 34 companies Iran pre-qualified last year for development of South Azadegan field, which contains an estimated 33 billion barrels of oil in place, of which 6 billion barrels are deemed recoverable. The field currently produces about 80,000 barrels of oil per day (4 million tonnes per annum) and output is envisaged to touch 320,000 barrels a day (16 million tonnes).

Sources said OVL will make a formal bid when National Iranian Oil Co (NIOC) opens a tender for developing the South Azadegan oilfield.

Other firms prequalified include Japan's Inpex Corp, China's CNPC, Eni of Italy, Sinopec of China and Russia's Gazprom, Lukoil and Rosneft.

Sources said OVL had last year made its 'best' offer to invest USD 11 billion in developing the Farzad-B field as well as in building the infrastructure to export the gas but Iran has deterred awarding the rights of the field to the Indian firm owing to differences over pricing of the fuel.

With the deal on the verge of collapsing, OVL has offered to do just the upstream part of bringing the field to production while leaving the marketing of the fuel to Iran, they said, adding that the upstream part is to cost USD 6.2 billion while another USD 5 billion will be required to build a liquefied natural gas (LNG) export facility.

Iran believes the upstream investment should not be more than USD 5.5 billion.

Farzad B was discovered by OVL in the Farsi block about 10 years ago. The field in the Farsi block has an in-place gas reserve of 21.7 trillion cubic feet, of which 12.5 tcf are recoverable.

Yesterday, Oil Minister Dharmendra Pradhan held talks with his visiting Iranian counterpart Bijan Namdar Zangeneh where he pressed for a stake for Indian companies in a producing oilfield and promised to raise crude oil import from the Persian Gulf nation in the year beginning April to reverse the reductions introduced in the current fiscal.

Zangeneh said he was "optimistic" about signing of an agreement awarding rights of Iran's giant Farzad-B gas field to its discoverer, OVL. A team of officials led by OVL will be visiting Tehran this week to renegotiate terms.

He said Indian public and private sector oil companies will in 2018-19 fiscal buy 0.5 million barrels of crude oil per day (25 million tonnes).

This will be 25 per cent more than current fiscal imports estimated at 370,000 barrels per day (18.5 million tonnes).

India had for the current fiscal cut oil imports from Iran by nearly 25 per cent over delays in award of Farzad-B development rights to OVL. In 2016-17, India had imported 510,000 barrels per day (25.5 million tonnes) of oil from Iran.

Pradhan said Iran has given "good incentives" on crude oil exports to India. "It will be beneficial for India to buy more crude from Iran rather than from other countries. We have agreed that India will buy more crude oil from Iran in coming days."

Like the recent acquisition of 10 per cent stake in 20 million tonnes a year producing oil field in UAE, India made a case for a stake in a producing Iranian oil field, he said, adding that on Indian horizon was a field like South Azadegan.

"The deadlock we had on the viability of Farzad-B block, its size of capex, return, timeline, we discussed all the three issues. We have exchanged our positions. Next week our business delegation will go to Tehran to discuss all these issues," he said.

The two sides, he said, decided to remove "all the bottlenecks on all the three issues. On the capex, business model and timeline. We have decided today to reopen and re-engage on all three issues again."