TEHRAN – Relations between the Iran and India, which have long held deeptrade ties, were strained last year after Iran sought other investors forthe field and media reports suggested Tehran would award it to Russia’sGazprom.

In retaliation, India directed its state refiners to cut oil imports fromIran.

At a meeting in New Delhi in February, Iran reduced the scope of thedevelopment plan for the Farzad B field and asked India to submit a revisedproposal, said the two sources, who did not wish to be identified due tothe sensitivity of the matter.

New Delhi and Tehran have been trying to narrow differences over Farzad Bdevelopment rights since its discovery by Indian firms led by ONGC Videsh,the foreign investment arm of Oil and Natural Gas Corp, in 2008.

Indian companies were hoping to get rights to develop the asset as Indiawas one of the handful of nations that continued to deal with Iran duringyears of sanctions against the country over its nuclear programme.

The new terms confine Indian companies to just production of gas anddevelopment of the field, said the two sources.

Although a formal offer is yet to be made, sources said, the new bid wouldbe between $3 billion and $4 billion and would not include gas processingand development of downstream projects.

“As the negotiations are still ongoing, we would not like to comment atthis stage,” ONGC Videsh said in response to a Reuters’ email seekingcomments.

At the request of Iran, Indian companies last year submitted a $11-billiondevelopment proposal that covered the development of upstream activitiesand downstream infrastructure.

The field is estimated to hold 22 trillion cubic feet (tcf) of reserves, ofwhich 16 tcf are deemed recoverable.

India and Iran will discuss the revised development plan for the field nextweek, during Iranian oil minister Bijan Zanganeh’s visit to New Delhi.