Iran says India should pay more for LNG contract

24 April 2007

Tehra: India should increase its offered price to secure a major contract for liquefied natural gas (LNG) deliveries signed two years ago, a senior Iranian oil official was quoted as saying on Sunday.

India in June 2005 signed a deal with Iran to import 5 million tonnes of LNG annually over 25 years from 2009, with an option to buy an additional 2.5 million tonnes a year, to help tie up supplies for the energy-starved nation.

Iran in May last year told New Delhi that its Supreme Economic Council had not approved the deal, priced at USD 3.25 per mn British thermal units, after a sharp rise in oil prices, and said it was demanding more.

Oil Minister Murli Deora said in January India was willing to pay a higher price for extra LNG quantities from Iran if the Islamic Republic honoured the existing contract for five million tonnes.

But Nosratollah Seifi, head of the National Iranian Gas Export Company (NIGEC), suggested this was not enough. "We have told the Indian side that if they have a serious desire for this contract, they have to suggest a proper price in negotiations because their current price is low," he told agencies.

"The Indian side has given its suggestions a number of times but has not announced its official view," he added.