New Delhi, May 15 (PTI): Iran has set fresh price terms for awarding the coveted Farzad-B natural gas block to ONGC Videsh (OVL).

Iran wants India to buy all the natural gas to be produced from the Persian Gulf block at a price equivalent to the rate Qatar charges for selling liquefied natural gas (LNG) to India under a long-term deal.

Qatar, according to a revised formula agreed upon in December 2015, sells 7.5 million tonnes a year of LNG to Petronet LNG Ltd - India's biggest gas importer - at a price of $7-plus per million British thermal unit.

The rate being sought by Iran is triple of $2.3 per mmBtu rate OVL is willing to pay for the gas during low global oil prices. If global rates rise, OVL is willing to pay $4.3 per mmBtu, sources privy to the development said.

When oil prices move up, rates of LNG from Qatar will also rise.

Sources said that since the withdrawal of Western sanctions, Iran is playing hardball over the award of the field which was discovered by OVL - the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC).

OVL has recently submitted a $5.5-billion master development plan to bring the gas in Farzad-B to production.

Iran allows all the cost sunk in by an operator to be recovered from the sale of oil or gas. For this reason, it wants OVL to reduce the cost of development as well as pay a higher gas price.

The two nations were initially planning to conclude a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017.

Now, the deal is being targeted to be wrapped up by September after the two sides agree on a price and a rate of return for OVL's investments.

Farzad B was discovered by OVL in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India Ltd and Indian Oil Corp (IOC), over $80 million. The field in the Farsi block has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable.