Iran seeks to raise IPI gas price to $7.2 per MBTU
06 July 2006
Mumabi: Iran has proposed a price of $7.2 per million British thermal unit (MBTU), with a three per cent annual escalation, for the natural gas it wants to sell to India through the $7-billion Iran-Pakistan-India (IPI) pipeline.
Iran has forwarded a gas pricing formula linking the price of its gas to Brent crude oil with a fixed escalating cost component (10 per cent of Brent crude oil), reports quoting government sources said.
The price is more than 50 per cent the prevailing market price in India and way above the $4.25 per MBTU price India pays for gas delivered at its border. Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price, the official said.
While New Delhi is opposed to both linkage with Brent crude oil and absence of floor and ceiling, Pakistan too has rejected the formula.
The last official-level talks between the three countries in Islamabad broke down on the issue of pricing the gas. The current meeting would be followed by a meeting of energy ministers of the three countries in Tehran to finalise modalities for implementation of the pipeline project.