India willing to pay 50% more for Iran LNG

India is willing to pay 50 per cent higher price than the one agreed in June last year, to buy 5 million tonnes of Liquefied Natural Gas (LNG) from Iran.

New Delhi, Dec 11: India is willing to pay 50 per
cent higher price than the one agreed in June last year, to buy 5 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 5 million tonnes of LNG at
3.125 dollar per MBTU cap price, are now willing to pay 4.775
dollars per MBTU.

"Iranians have been insisting that the June deal is off
unless price is revised. Though we have a water-tight legal
case against them for not honouring a signed deal, we do not
want to rock the boat now," a top official said.

As per the formula agreed last year, Iran was to charge
India 6.5 per cent of the Brent crude oil price at the time of
loading of each consignment plus a fixed price of 1.2 dollars
per MBTU. Price, according to this formula, was to be capped
at 3.215 dollars per MBTU at 31 dollars a barrel Brent price.
For the initial two years, a 10 per cent discount was allowed
leading to a price of 2.9 dollars per MBTU from 2009 to 2011.

"We are willing to raise the 31 dollars cap to 55
dollars," the official said adding Tehran had sought a higher
ceiling of 65 dollars per barrel.

At 65 dollars, the free-on-board price would come to
5.425 dollars per million BTU.

To this 0.30 dollars 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 5 million tonnes per annum, LNG to be imported
from Iran, Gail will be responsible for marketing 40 per cent,
IOC 35 per cent and BPCL the remaining 25 per cent, the
official said.

Bureau Report

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