Iran has given India's Oil and Natural Gas Corporation (ONGC) a one-month deadline to sign the contract for the development of Iran's offshore Farzad-B gas field in the Persian Gulf.
Two informed sources speaking to Dow Jones on condition of anonymity said a team from the ONGC would visit Iran later this month to continue talks for signing the service contract to develop the gas field, which lies in the Farsi block to the north of Qatar.
"ONGC wants to keep Iran engaged. It plans to continue talks and seek more time for decision-making," one of the sources said, adding, "Under the current political climate, there's no way ONGC can do anything more than that."
The ONGC, the operator of the Farsi block, owns 40-percent of its interest. The state-run Indian Oil Corporation and Oil India Ltd. own the remaining shares in the consortium.
In 2002, they won the National Iranian Oil Company's exploration service contract for the block and declared Farzad-B gas field commercial in 2008 after drilling several wells.
This comes while the ONGC has not signed the development service contract or committed any investment for the gas field so far.
The company is likely to seek more time from Iran to find a way around recent financial sanctions imposed on the Iranian oil and financial sectors by the US and the European Union.
The Press Trust of India, quoting an unnamed official, reported in October 2010 that the ONGC has estimated the cost of developing Farzad-B gas field to be at about USD 5 billion over seven to eight years.
Oil experts believe the ONGC has been delaying the negotiations with Iran as it does not want to abandon a promising discovery and hopes further improvements in business conditions.
On New Year's Eve, US President Barack Obama signed into law fresh unilateral economic sanctions against Iran's Central Bank and oil sector aimed at preventing other countries from importing Iran's crude oil.
The EU followed suit by slapping new sanctions against Iran's oil imports in a meeting of the bloc's foreign ministers on January 23. EU sanctions also include a freeze on the assets of the Iranian Central Bank in member countries and a ban on the sale of grains, gold, diamonds, and other precious metals to Iran.
The US, Israel and EU accuse Tehran of pursuing military objectives in its nuclear program, but Tehran insists that as a signatory to the Nuclear Non-Proliferation Treaty and a member of the International Atomic Energy Agency, it has a right to use nuclear technology for peaceful purposes.
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