Indian firms led by ONGC Videsh, the foreign investment arm of Oil and Natural Gas Corp, have been negotiating with Iran for development rights of Farzad B gas field since its discovery in 2008.

“We have been flexible in our dealings with Iran and hoped that Farzad will add to our output target but the deal is not yet finalised. In the meantime we are looking for producing assets elsewhere to boost our output,” N K Verma told Reuters.

ONGC Videsh is targeting production of 60 million tonnes of oil and gas by 2030 from 12.80 million tonnes in 2016/17. Verma listed Africa, Central Asia and Latin America as preferred regions for acquiring producing assets. India was hoping to get rights to develop Farzad B as the South Asian nation was one of the handful countries that continued to deal with Tehran despite sanctions.

But since the end of some sanctions last year, Iran has sought other investors and media reports suggest that Tehran has agreed to award the field to Russia’s Gazprom. Verma said India modified its bid several times to match Tehran’s expectations and terms to get the development rights.

“We wanted to do only upstream but Iran asked us to include downstream so we revised and raised our bid to $11 billion and linked gas prices to international benchmarks,” he said. ONGC had previously submitted a $5 billion deal.

Iran has modified its petroleum contract model, ending a decades-old buy-back system that barred foreign firms from booking reserves or taking equity stakes.

Under new terms Iran wants India to operate the field for 20 years and commit to buying gas for 25 years at prices higher than those proposed by ONGC, he said.

Iran’s previous contracts gave investors an assured return of 18 per cent.

“Our calculations show that under new rules we would be getting returns in low single digit and do not justify taking investment and production risk,” Verma said.

The Farzad B field lies on the border of Iran and Saudi Arabia, which has begun gas production from its side of the project called Hisbah. India, the world’s third-biggest oil consumer, has told state oil firms to acquire assets overseas to improve energy security. India imports about 80 per cent of its crude needs.

“We are still keen to develop the fields if Iran offers us good returns as our main aim is to book reserves for our country,” Verma said.