Iran cuts LNG offer price to India by 8%

Faced with a downswing in global crude oil prices, Iran has lowered its quoted price for the 5 million tonnes of LNG it has committed to export to India. New Delhi today said it was willing to consider the new price.

Iran is now offering to sell the LNG pegged to a crude price of $56 a barrel. With the hardening of crude in international market in the past year, Teheran had raised its demand to $65 a barrel from $31 agreed between both nations in June 2005.

In lay terms, Iran is willing to sell the gas at $4.8 per million British thermal units (mBtu) compared to $5.2 it had demanded at $65 a barrel. The June agreed price was $3.2 per mBtu.

The June deal, subject to ratification by the Iran government, got bogged down over this price dispute and the haggling became a stumbling block in attempts to bring Iranian gas to India.

The revival of the LNG deal became a possibility with Iran?s Foreign Minister Manouchehr Mottaki, who is visiting New Delhi, offering the new price. He has asked India to respond within three days.

Petroleum Minister Murli Deora said that the two sides would start working on the basis of the new Iranian offer. ?India and Iran are renegotiating the LNG pricing,? Deora said after talks with Mottaki.

Separately, Mottaki and Deora said both nations were awaiting a report on the price to be paid for Iranian gas to be delivered through the proposed $7 billion Iran-Pakistan-India pipeline.

The three agreed last month to appoint an independent consultant to suggest a price for the pipeline gas. The preliminary report of the consultant was not acceptable to both Islamabad and New Delhi as they had not been consulted in fixing the pricing parameters.

The consultant is expected to submit its report soon and this would be followed by secretary-level talks between the three countries in Tehran. Mottaki expects both projects to be finalised before the end of this year.

On Russia?s involvement in the IPI pipeline, both Iran and India are agreed they have no objections but would prefer to offer the project construction once the pricing issue is resolved.

Source: The Indian Express, New Delhi
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