India, Pakistan disagree with UK consultant''s price for Iran gas

A consultant's recommendation on pricing of the Iranian gas has been rejected by India and Pakistan. The two countries found the price for the gas to be supplied from the proposed pipeline running through Pakistan to India to be unacceptable.

The UK-based Gaffney Cline & Associates had been appointed by Iran, Pakistan India, earlier in September 2006, following disagreements between them over an acceptable rate.

At that time there was a 60 per cent difference between the price proposed by Iran and what India and Pakistan were willing to offer. While India suggested a price of $4.25 per mbtu at its own border, Islamabad wanted Tehran to offer a price in line with international practices for long-term contract.

Iran had proposed a formula linked to prices of Brent crude, in which the price of gas is arrived at by adding 0.1 per cent of Brent price to a fixed cost of $1.2 per million British thermal unit. As per this formula, the price of natural gas at Iran-Pakistan border comes to be $7.2 dollars per mbtu, considering a $60 a barrel price for Brent.

India, Pakistan and Iran then jointly set up a committee of experts to go into the pricing of natural gas that Iran proposed to sell to New Delhi and Islamabad and appointed the UK-based consultant.

Oil Minister Murli Deora told Parliament that the consultant had been provided fresh data to arrive at a fresh pricing.