India may pay higher price for LNG from Iran

India is considering paying a higher price to buy five million tonnes of LNG from Iran. Petroleum Secretary Mr M.S. Srinivasan told newspersons that "the possibility of a price increase" is under consideration. "With the see-saw (fluctuations) in international crude prices, it has to be a well thought-out decision."

The revised price that India is willing to offer may have to be approved by the Cabinet, he added. India had offered Iran $2.9 per million British thermal unit (mBtu) in 2005, benchmarked to an international crude oil price of $31 a barrel.

"We are considering $45-50 per barrel as the benchmark international crude price for LNG. This translates to below $4.5 per mBtu," the Secretary said.

In June 2005 GAIL (India), IOC and BPCL signed a 25-year deal with National Iranian Gas Export Co to buy five million tonnes of LNG a year.

But the Economic Commission of Iran is yet to ratify the agreement. Citing sharp rise in oil prices Iran has been demanding higher price. Of the five million tonnes, GAIL will be responsible for marketing 40 per cent, IOC 35 per cent and BPCL the rest.

As regards Russian participation in the project, he said that India welcomes the entry of Russian firms into the Iran-Pakistan-India gas pipeline project. "We have told Russia that we will welcome the idea. It is up to the Russian Government to take it up with the parties concerned."

Source: Business Line, New Delhi
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