New Delhi, Feb. 6: A team of officials from ONGC Videsh Ltd (OVL) is likely to visit Tehran later this month to negotiate the fate of the Farzad-B gasfield. Iran has threatened to cancel the contract with OVL, the overseas arm of state-owned explorer ONGC, if it failed to sign a deal to develop the field within a month.

Industry sources said a team of officials would be visiting Iran to understand the reasons for the deadline. India is reluctant to sign the deal as sanctions from Europe and the US could make it hard to get rigs and other specialised equipment, which are usually sourced from western countries. The US is against any company investing more than $20 million in Iran’s energy sector in any 12-month period. India is already facing problems in routing payments for its oil imports.

Iran had earlier threatened to cancel the block because of the delay in signing the field development contract. However, sources pointed out that “the language of the latest letter is certainly much stronger than the past … they want the development contract signed in a month’s time”.

The two countries have been in talks for three years on the issue. China is likely to snap it up if India backs out.

Meanwhile, the government has asked upstream oil firms such as ONGC to give about Rs 36,900 crore in fuel subsidy during April to December 2011, an official said today. Fuel retailers IOC, HPCL and BPCL have lost Rs 97,300 crore in revenue on selling diesel, LPG and kerosene at government-controlled rates in the first nine months of this fiscal.