Iran, India may revive LNG deal

Indications emerged today on the possibility of India and Iran reviving an LNG deal struck last year, with Tehran offering a new price and New Delhi saying it was willing to raise its offer slightly for importing five million tons of natural gas from 2009.

The deal between the two nations became cold after New Delhi rejected Tehran's demand for $5.10 per mBtu as against the agreed price of $2.90 per mBtu.

"They have given us a new offer and now we will start working on that," petroleum minister, Mr Murli Deora said after a meeting with Iran's foreign minister, Mr Manouchehr Mottaki that lasted for more than an hour.

Mr Deora said that the Iranian minister had indicated that the price offered by India was very low and that it must be renegotiated.

"A little more price is acceptable, but the new price should not be very high from what we had offered," he said, adding, "with the new formula I am very hopeful that the deal would fructify:' Talking to media persons after the meeting, Mr Mottaki 'saidl India and Iran complement each other as Indial wants gas for its developmental plans and IranI wants to earn revenuesl from gas exports.
"I am optimistic thatl with further negotiationsl, with a specific formula, you will receive gas very I soon," he said.

The Iranian minister had yesterday said: "We are going to offer a new price. If it is accepted, the project would be implemented."
Mr Deora said the next bilateral talk on the LNG deal between the two countries would be held very soon. He also indicated that India might ask for raising the volume of LNG to be imported.

India had originally sought to import 7.5 million tons of gas, of which the price was negotiated for five million tons last year.
"But that (increasing volume) would happen only after we finalise this deal," he said.

On the mutli-billion dollar Iran - Pakistan - India (lPI) natural gas pipeline, Mr Mottaki said: "We are waiting for the final report of the consultants and will continue our negotiations both bilateral and trilateral to reach a common ground and implement the huge project."

Deora said the next secretary level talks between the three nations will be held within a month in Tehran to review fixation of gas prices.
Talks are currently stalled over gas pricing, as the rates proposed by Tehran are much higher than what was envisaged.

The three nations have appointed UK-based consultants Gaffney, Cline & Associates to advise on the natural gas price to be supplied to India and Pakistan from Iran.

A decision to appoint an international' consultant was taken after a two-day secretary level trilateral meeting in August failed to reach a breakthrough on the issue of gas price.

While Iran wanted the price linked to crude oil, the buyers jointly sought a price band with a floor and ceiling.

Source: The Statesman, New Delhi
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