India may pay 50% more for Iran LNG
1-Jan-1970


India is willing to pay 50% higher price than the one agreed in June last year, to buy five million tonnes of Liquefied Natural Gas (LNG) from Iran. GAIL (India), Indian Oil Corporation and Bharat Petroleum, which had in June 2005 signed a deal with National Iranian Gas Export Company to buy five million tonnes of LNG at $3.125 per mBtu cap price, are now willing to pay $4.775 per mBtu.

?Iranians have been insisting that the June deal is off unless price is revised. Though we have a watertight legal case against them for not honouring a deal, we do not want to rock the boat now,? an official said. As per last year?s formula, Iran was to charge India 6.5% of the Brent crude oil price at the time of loading of each consignment plus a fixed price of $1.2 per mBtu. Price was to be capped at $3.215 per mBtu at $31 a barrel Brent price. For initial two years, a 10% discount was allowed leading to a price of $2.9 per mBtu from 2009 to 2011.

?We are willing to raise the $31 cap to $55,? the official said adding Tehran had sought a higher ceiling of $65 per barrel. At $65, the free-on-board price would come to $5.425 per mBtu. To this $0.30 per million Btu would be added for transporting the gas in its liquefied form in specialised tankers from Phase 12 of the gigantic South Pars as field.

Of the five million tonnes per annum, LNG to be imported from Iran, GAIL will be responsible for marketing 40%, IOC 35% and BPCL the remaining 25%. The official said the fixed price component ($1.2 per mBtu) would have an escalation of 2% every year after the second year of the contract delivery. New Delhi wants Iran to maintain C2 (ethane) content in the LNG at 5%.



Source: The Times of India, New Delhi
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