New Delhi: With India reluctant to pay a higher price for the liquefied natural gas contracted in 2005, Iran has proposed to sell the fuel to Indian private sector.
“Yes, one of the proposals is to sell the (5 million tonne a year) LNG to private companies once government-run firms withdraw (from the contract),” said H Ghanimi Fard, special representative of Iran’s Petroleum Minister.
The IOC-GAIL-BPCL combine in June 2005 signed a $22 billion deal to import 5 million tonne of LNG from Iran beginning 2010. However, the new government in Tehran has refused to honour the deal unless a higher price is paid and has begun dialogue with private sector firm to sell that gas.
Iran has sent feelers to Indian government seeking transfer of the volumes committed in 2005 to private firms. But New Delhi is not impressed and wants Tehran to fulfil the 2005 commitment first and it could sell additional LNG to private firms like Essar and Anil Ambani Group.
Ghanimi said Iran had put forward options for reviving the LNG deal and it is for New Delhi to respond. He did not elaborate on the options but clearly indicated that Tehran would not settle at the June 2005 agreed price. “The price has to be raised,” he said.
Indian officials, however, said Iran should supply 5 million tonne a year of LNG at the June 2005 agreed price of $3.215 per million British thermal unit (mBtu) and New Delhi is willing to pay a higher price for an additional 2.5 million tonne a year of LNG.
The June 2005 contract had LNG prices linked the Brent crude oil price with a cap at $31 per barrel. Iran now wants to raise this ceiling to $55, raising the LNG price to $4.78 per mBtu for additional volumes, thereby averaging the cost for 7.5 million tonne of LNG to $3.74 per mBtu.
Tehran is willing to honour the June 2005 price only if the additional 2.5 million tonne bought at $7.92 per mBtu so as to average the price to $4.78 per mBtu.