State-run refiner Indian Oil Corp. has reached an agreement with Iran's Petropars, a unit of NIOC, to jointly develop a natural gas block in Iran's South Pars gas development in the Persian Gulf. South Pars ranks as the world's largest offshore gas field and extends from the Iranian sector of the gulf into Qatari waters, where it is known as the North field.
The two companies also propose to build a liquefaction facility in Iran for liquefied natural gas. The development of the gas block is estimated to cost more than $3 billion and the two companies will share the costs directly in proportion to their equity. The size of the respective stakes hasn't yet been decided.
India has only around 80 MMcm/d of gas available for sale, which meets only around 70% of the country's demand. Analysts say the country will have to depend on natural gas imports despite local discoveries, as demand is expected to surge to 325 MMcm/d by 2019-20. Amid that surge in demand, Indian firms are looking at the prospect of buying stakes in oil and gas fields overseas to supplement a flagging domestic petroleum output.