Tehran (Platts)--20Mar2013/844 am EDT/1244 GMT

Iran is re-appraising an offshore oil field that India's Oil and Natural Gas Corporation (ONGC) had abandoned as commercially non-viable, the semi-official Mehr news agency reported Wednesday.

"The project is at the stage of processing seismic data," Jalal Mousavi, head of the National Iranian Offshore Oil Company's research and development bureau, was quoted as saying.

Mousavi said Binaloud held about 3.5 billion barrels of oil in place, more than three times ONGC's estimate of 1 billion barrels of heavy crude with 14-degree API gravity.

"Even though preliminary studies by ONGC evaluated the field as uneconomical, [our] studies and examinations show that with different approaches we can produce from the field," Mousavi said.

Unnamed consultants from two domestic universities have suggested Binaloud's crude could be produced economically within the next few years, Mehr said.

The agency cited a 2013 National Iranian Oil Company statement confirming the start of a study to re-evaluate Binaloud and challenge ONGC's assessment of the field as non-commercial.

ONGC discovered Binaloud in 2009. In accordance with Tehran's model for oil exploration and development, the Indian state-owned company was granted priority to develop its discovery. The company's subsequent decision to abandon Binaloud, however, removed its eligibility to perform further exploration in the offshore license area, opening the way for Tehran to step in.

Iran and India in 2002 announced a memorandum of understanding on developing the Farsi block, which contains Binaloud and the large Farzad B gas field, Mehr said. However, ONGC never signed a contract with Tehran for the proposed $5 billion oil and gas development.

In February 2012, Iran issued an ultimatum to ONGC to decide whether it would develop Farzad B, after the company missed the November 2010 deadline that had been set for the investment decision.

Farzad B's reserves are estimated at 12.5 trillion cubic feet of natural gas and 212 million barrels of condensate. The first development phase of the project is expected to yield 1.1 Bcf/d of gas output.

International oil companies, even those such as ONGC that are not directly bound by US and EU sanctions on Iran over its nuclear program, have recently been wary of participating in Iranian oil and gas development. Most have bowed to US-led pressure aimed at isolating Tehran.

--Aresu Eqbali, newsdesk@platts.com

--Edited by Tamsin Carlisle, tamsin_carlisle@platts.com

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