Iran may put LNG deal on backburner
10 May 2007
New Delhi: According to an internal assessment by the petroleum ministry Iran may put the $22-billion deal to sell liquefied natural gas (LNG) to India on the backburner, as India has not agreed to re-open a contract with Iran agreed to in 2005.
Petroleum minister Murli Deora, in a report to the prime minister''s office on his meeting with Iranian president Mahmoud Ahmadinejad last month, said while India was committed to the Iran-Pakistan-India pipeline project and the LNG contract on equal terms, his assessmsnt was that Iran would prioritise the IPI project and continue to ask for a renegotiation of the LNG deal.
India wants Iran to supply 5-million tons a year of LNG at the price agreed in June 2005 $3.215 per million British thermal unit (mbtu), while it was willing to pay a higher price for an additional 2.5 million tons a year of LNG.
In June 2005 the two countries had agreed to LNG prices linked the brent crude oil price with a cap at $31 per barrel, but now with world crude prices having increased, Iran wants to raise this ceiling to $55, raising the LNG price to $4.78 per mbtu.
India, on the other hand, is willing to pay $4.78 per mbtu for additional LNG, averaging the cost for 7.5 million tons of LNG to $3.74 per mbtu.
Iran
says it is willing to honour the June 2005 agreement only if the additional 2.5
million tons was bought at $7.92 per mbtu, so as to average the price to $4.78
per mbtu.
