TEHRAN – Tehran has picked Russian energy major Gazprom to develop the Farzad B gas field, discovered by India’s Oil and Natural Gas Corporation (ONGC). The deal follows India’s decision to cut purchases of Iranian oil.

“We have signed an initial agreement with them (Gazprom) on Farzad, the North Pars and Kish fields,” Iranian Oil Minister Bijan Namdar Zanganeh told Argus Media.

ONGC discovered the gas field in 2012. In-place reserves are estimated at around 21.7 trillion cubic feet (614 billion cubic meters) of which around 60 percent is recoverable. Production is expected to be around 1.1 billion cubic feet/day (31 million cubic meters/day).

Tehran and New Delhi failed to finalize a commercial contract for Farzab B despite optimism expressed by Iranian President Hassan Rouhani and Indian Prime Minister Narendra Modi last year.

With Iran delaying the award of rights to develop the 12.5 trillion cubic feet (354 billion cubic meters) gas field to its discoverer, India decided to cut oil imports from Iran by a fifth (or 190,000 barrels per day (bpd) from 240,000 bpd) in 2017-18.

Iran responded by reducing the credit period for Indian refineries to 60 days. India’s third biggest oil supplier, Tehran used to give a 90-day credit period to refiners like Indian Oil Corporation and Mangalore Refinery and Petrochemicals.

The country’s oil sale terms were the most attractive for Indian companies as other Middle-East sellers offer no more than a 15-day credit period. Iran also shipped the oil to India for a nominal 20 percent of standard ocean freight.