India, Iran agree to rework LNG pricing mechanism

NEW DELHI: India and Iran on Friday moved closer to reviving the stuck LNG import deal, with both the sides agreeing to renegotiate the agreement with Tehran offering a new price and New Delhi saying it was willing to raise its offer slightly for importing 5m tonnes (mt) of LNG from ’09.

The two countries also agreed to hold further bilateral and trilateral negotiations for reaching an agreement on the proposed Iran-Pakistan-India gas pipeline after the final report of the consultant studying the feasibility of the project is released. “They have given us a new offer (on pricing) and now we will start working on that and take a decision,” petroleum minister Murli Deora said after a meeting with Iran’s foreign minister Manouchehr Mottaki.

“A little higher price is okay but the new price should not be very high from what we had offered...with the new formula I am very hopeful that the deal would fructify,” Mr Deora said. The Indo-Iran LNG import deal, entered more than two years back, got stuck after New Delhi rejected Tehran’s demand for $5.10 per mBtu for LNG as against the originally agreed price of $2.90 per mBtu.

The deal involves supply of 5mt of LNG annually by Iran for 25 years with supplies beginning in ’09. The visiting Iranian minister said India and Iran complement each other as India wants gas for its developmental plans and Iran wants to earn revenues from gas exports. “I am optimistic that with further negotiations with a specific formula, you will receive gas very soon,” he said.

Mr Deora said the next bilateral talk on the LNG deal between the two countries would be held very soon. He also indicated that India might ask for raising the volume of LNG to be imported. India had originally sought to import 7.5m tonnes of gas, of which the price was negotiated for 5m tonnes last year.

On the multi-billion dollar Iran-Pakistan-India (IPI) natural gas pipeline, Mr Mottaki said the final report of the consultants was awaited after which bilateral and trilateral negotiations would be held to reach a common ground.

The three nations have appointed UK-based consultants Gaffney, Cline & Associates to advise on the natural gas price to be supplied to India and Pakistan from Iran.

Mr Deora said the next secretary-level talks between the three nations will be held within a month in Tehran to review fixation of gas prices under the pipeline project.