India mulls higher price for Iran LNG

India, which had signed a five-milliontonne liquefied natural gas (LNG) deal with Iran last June at an attractive price of just $2.9 per million British thermal units (mmBtu) is now willing pay more for buying the fuel at $4.5 per mmBtu. This comes at a time when the Indo-US nuke deal is in its final stage, widening India?s energy options, potentially reducing dependence on imported hydrobarbons and strengthening New Delhi?s bargaining position while striking energy deals.

?The possibility of revising the price is under consideration,? petroleum secretary MS Srinivasan said on the sidelines of a seminar organised by the Oil Industry Safety Directorate. In June 2005, domestic oil firms ? Gail (India), Indian Oil Corporation and Bharat Petroleum Corporation ? had signed a 25-year deal with National Iranian Gas Export Company to buy five million tonnes of LNG a year at a price linked to $31 a barrel of crude oil, which translates to $2.9 per mBtu.

India is open to linking the LNG price to $45-50 a barrel of crude oil, which translates to a little less than $4.5 per mmBtu, Mr Srinivasan said. This would be the price for the first two years of LNG supply, slated to commence in 2009. The price would finally be approved by the Cabinet. Citing sharp increase in global crude prices, Tehran had refused to honour the deal at the price agreed earlier and demanded that India pay more.

Source: The Economic Times, New Delhi
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