Indian group’s bid for Israeli block a turn away from Iran

Dec. 29, 2017
ONGC Videsh Ltd. (OVL) and partners will receive exploratory rights to a block off Israel in what looks like a swerve by India away from Iran.

ONGC Videsh Ltd. (OVL) and partners will receive exploratory rights to a block off Israel in what looks like a swerve by India away from Iran.

The international investment arm of state-owned Oil & Natural Gas Corp. led a group that bid on Block 32 during an inaugural offshore auction that closed in November.

Energean Oil & Gas of Greece submitted the round’s only other bids and has been awarded licenses for all five.

On Dec. 11, the Petroleum Council of Israel’s energy ministry recommended that the OVL group receive the sixth block.

According to unofficial reports, that had happened by month’s end. It almost certainly will happen, in any case.

Before a visit by Indian Prime Minister Narendra Modi to Israel last July, the Israeli energy minister appealed to his counterpart in New Delhi for participation by Indian companies in the licensing round.

By then, international interest in the 24 blocks on offer was looking tepid.

Other members of the OVL group also are government-owned: Bharat PetroResources Ltd., Indian Oil Corp. Ltd., and Oil India Ltd.

OVL also leads a group that discovered Farzad B natural gas field off Iran under an exploration services contract, now expired, with National Iranian Oil Co.

The field was declared commercial in 2008, but international sanctions blocked development. Although that’s no longer a problem, OVL and its partners in the Iranian project, IOCL and OIL, haven’t received development rights.

Iranian officials say the Indian consortium wants too much; the Indian group fears it’s being sidelined in deference to Russian companies as Moscow and Tehran strengthen relations.

By leading a group of state-owned enterprises soon to hold exploration rights off Israel, OVL sacrifices bargaining power on Farzad B, of course.

But the Block 32 bid demonstrates India’s clear determination to broaden relations with Israel, heretofore limited to quiet cooperation on defense.

Israeli Prime Minister Benjamin Netanyahu will visit India in mid-January. If it doesn’t now, OVL will have the Block 32 license by then.

(From the subscription area of www.ogj.com, posted Dec. 29, 2017; author’s e-mail: [email protected])