India's Oil & Natural Gas Corp. (ONGC) says it is in talks with Iran's Petropars Company to buy a stake in Iran's giant South Pars gas field.

In a telephone interview with Bloomberg, ONGC Videsh managing director, R.S. Butola, said that based on an 'initial agreement with Petropars', the Indian company aims to acquire 'some' stake in Phase 12 of South Pars.

In early September, Iran said talks were underway with a consortium of three Indian companies, including ONGC Videsh, Oil India, and Indian Oil Corp., who had voiced readiness to invest up to $5 billion on the offshore Farsi natural gas field in southern Iran.

ONGC is targeting 60 million metric tons of overseas oil and gas production by 2025, almost double the country's output in the year ending on March 31, in a bid to offset declining production at its ageing domestic wells.

“The sheer reserves in Iran make sense for any oil company to invest there,” said A.N. Sridhar, a fund manager at Sahara Asset Management Co. in Mumbai. “ONGC needs to go wherever there is lots of gas.”

South Pars is estimated to hold about 14 trillion cubic meters of gas, or about eight percent of the total world reserves. Iran says it will be able to produce 77 million tons of LNG a year by 2014.

AKM/MB