India to re-negotiate gas price with Iran

India and Iran are likely to find a solution soon to the contentious issue of gas pricing which has been haunting the two projects - liquefied natural gas (LNG) deal and Iran-Pakistan-India (IPI) pipeline - between the two countries.

India today indicated that it was willing to renegotiate the gas price for the 5-million tonne (mt) LNG deal with Iran that was struck in June 2005.

"India will have a look at the fresh proposals from Iranian side regarding LNG contract," Mr Murli Deora, Petroleum Minister, told presspersons after a meeting here with the visiting Iranian Foreign Minister, Mr Manouchehr Mottaki. India had contracted for 5 mt LNG, which Tehran agreed to supply for a 25-year period, starting 2009. ``We're trying to reach an agreement where we don't pay more and they don't receive less,'' Mr Deora said.

"We are hopeful that the contract will now fructify," Mr Deora said.

Besides, the deal's fate was hanging in balance after India declined Tehran's demand for higher price as against the agreed price of less than $3 per mBtu. ``They have given us a new offer and now we will start working on that,'' Mr Deora said adding ``a little more price is ok but the new price should not be very high from what we had offered.''

"Iran has given a specific formula on the basis of which we will see how we can move further. Iran has given us time," he added.

Talking to media persons after the meeting, the Iranian Foreign 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.''

As regards the tri-national pipeline project, both the Ministers said that the report of the neutral financial consultant who would suggest the pricing formula was awaited after which an official level tri-lateral talks will take place in Tehran.

Mr Deora said the consultants appointed for suggesting a pricing formula for IPI Gas Pipeline Project were expected to submit the report soon.

Source: Business Line, New Delhi
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