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 India may continue to pursue investment opportunity in the Farzad-B gas field in Iran, even though ONGC Videsh Ltd (OVL) lost the development rights of the block that it discovered over a decade ago to local firm Petropars Group, highly placed government sources told IANS.

Reports from Iran indicate that months the after ejecting India from the ambitious $1.8 billion project, Tehrann has now brought in Petropars Group to develop the gas field in the Persian Gulf.

But the sources said that this would not deter the Indian entity from pursuing energy assets in the country and remain invested in the project. In fact, they indicated that Iran may formally announce a partnership with the Indian firm once development work of the field picks up pace.

Sources in the Oil Ministry said that Indian consortium including IndianOil, Oil India and OVL, which bagged the exploration contract for Farzad-B in 2002, may remained invested in the upstream project as equity partners with other local and international entities even without operatorship or development rights.

They are in talks with Iranian authorities in this regard to formalise the arrangement that gets India a share in gas fields output, they said.

If this option is permitted, it will allow the consortium to get their share of gas to India at applicable rates decided by Iran.

Though the exploration contract signed by the Indian consortium expired in 2009, the sources said that a deal could be negotiated so that India has a presence in the field as equity investors.

Early indications Iran also favour this arrangement, they said.

Farzad-B, which was discovered by OVL in the Farsi block about 10 years ago, had an in-place gas reserve of 21.7 trillion cubic feet, of which 12.5 Tcf is believed to be recoverable. If India gets a share of this gas, it could reduce its dependence on expensive LNG.

Iran had been dilly dallying over grant of development right of Farzad-B for few years now.

Things had come to a standstill since the US imposed sanctions in 2018 on Iran with India also moving slowly on the matter. This pushed Iran into suggesting that India was not serious about investing the project and decided to offer operatorship of the gas block to a local company.

The sources said that changes in geo-political scenario in the Covid-19 world, which suggests that Tehran may soon be out from US sanctions favour more active participation of India in Iranian energy assets.

If Iran decides to offer equity holding in the project, Indian consortium claims would once again be considered.

"There are two issues to Farzad-B project. Iran not giving development rights to OVL but an Indian consortium continues to have part ownership of the block and would get its share of profit whosoever develops the project," the sources said.

The OVL-led consortium have invested close to $100 million in the project.

India and Iran were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017.

The deadline to wrap up negotiations was later targeted for September 2017. But, with deal stuck over pricing of gas. Sanctions delayed the process thereafter and despite visits of ministers from both sides no agreement could be reached. OVL pushed for the deal with a sweetened offer that included investment of close to $11 billion.

But that also did not break the ice and the project remains in limbo.