New Delhi: Marking the first step in India's involvement for exploration in the Iranian oil sector, a consortium of Indian companies has signed a contract in Tehran to carry out exploration in the Farsi Block located in the Persian Gulf.

The consortium consists of Oil and Natural Gas Commission (ONGC)-Videsh and IOC (Indian Oil Corporation) with 40 per cent each and OIL (Oil India Limited) with 20 per cent of the equity. The contract, signed on December 25, with National Iranian Oil Company commits 27 million USD in exploration obligation.

Oil discovery in excess of 500 million barrels is expected, External Affairs Ministry spokesman told reporters.

Welcoming the Indian investment Iranian authorities expressed the hope this initiative would lead to increased participation by India in the Iranian hydrocarbon sector.

They said such cooperation would help in further consolidation of historical ties between the two countries.

The contract was signed in the presence of India's Ambassador to Iran P P Haer.

PTI