ONGC may face further delay in Iran's South Pars deal

Oil and Natural Gas Corp (ONGC) may get delayed in finalising a deal to take a 40 percent stake in Iran's South Pars Phase 12 gas project owing to difficulties in securing funding.

Banks are unwilling to fund the gas project as the Middle East country faces U.S. and UN economic sanctions. "We signed the MoU in December 2009. Thereafter, we have been in dialogue. We have to take care any initiative from us has to be in conformity with government policy," R.S. Sharma, chairman of ONGC said.

India is scouting for oil and gas assets abroad to meets its growing fuel demand and to expand its refining capacity.

According to a source on the matter, "It is not that it is a closed chapter. It is very much on our table but we have to see to the funding issue." "We have to spend money without violating sanctions... It is not easy." He rules out internal funding saying that "We cannot fund it through ONGC's balance sheet as we keep scouting for attractive assets. We need to have banks involved for transferring and to partly fund our share of development costs to Iran which is done in dollars."