India, Iran agree to renegotiate LNG price

With India offering higher price to Iran for importing five million tonnes of natural gas from 2009, the two sides today agreed to renegotiate the deal struck last year.

The deal between the two nations did not materialise after New Delhi rejected Tehran's demand for $5.10 per mBtu, compared to the agreed price of $2.90 per mBtu.

?A little more price is ok, but the new price should not be very high from what we had offered,? Petroleum Minister Murli Deora said after an hour-long meeting with the visiting Iranian Foreign Minister Manouchehr Mottaki.

The softening of the stance on part of Tehran should be seen in the context of Indo-US civilian nuclear deal going through the Senate and New Delhi tapping other regions to meet its energy requirements.

Mr Deora said, ?Iran has given a specific formula on the basis of which we will see how we can move further. There is some understanding between us of the need to renegotiate. Iran has given us time.?

?With the new formula I am hopeful that the deal would fructify,? he said, without disclosing the formula.

Mr Mottaki said Iran was keen to press ahead with both the LNG deal and the gas pipeline.

"I am sure with further negotiations with a specific formula we will finalise the LNG imports from Iran to India," he said. "Based on political will, India will receive gas very soon," he added.

The Iranian minister said the price offered earlier by New Delhi was very low.

He said there was ?political will on both sides? to finalise the LNG deal as also the multi-billion dollar tri-nation Iran-Pakistan-India gas pipeline project.

Both ministers said the final report of the consultants on the price to be paid for Iranian gas to be delivered through the proposed $7 billion pipeline would be available soon and a Secretary-level trilateral meeting would be held in Tehran next month on the issue.

Mr Deora said India required more gas supplies, primarily to meet the requirement of the power and fertiliser sectors, and said the high global gas prices had necessitated India's decision to agree to renegotiate.

While India has so far been maintaining that the deal, clinched in June 2005 in Tehran for LNG supply from 2009, is final and binding, Iran has taken the stand that the contract needed to be ratified by higher authorities.

Source: The Tribune, New Delhi
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