India seeks more liquefied gas from Iran; proposes $6.5 billion investments
30 Nov 2009
India has sought supply of additional liquefied natural gas (LNG) from Iran even as it proposed to invest $6.5 billion to develop gas fields in that country.
Indian officials told the visiting Iranian deputy oil minister and National Iranian Oil Co (NIOC) managing director Seifollah Jashnsaz that India was keen on buying 5 million tonnes of LNG a year over and above the quantity agreed to in 2005.
NIOC had previously blocked the deal, saying the gas price in the deal was too low. Tehran, in fact, wanted to re-negotiate the deal. New Delhi, however, refused to re-negotiate the deal saying the LNG contract was a legally binding document.
Under the 2005 formula, Iran was to charge India 6.5 per cent of the price of Brent crude oil plus a fixed price of $1.2 per mmBtu. With Brent crude price at around $31 a barrel, this formula had capped the LNG price at $3.215 per mmBtu.
Iran wanted the ceiling in the price of Brent crude raised to $65 a barrel at which the gas price would come to $5.425 per mmBtu.
New Delhi, sources said, was willing to pay not more than $4.75 per mmBtu for the LNG and has also opposed Iranian demand for assigning the contract to private firms like Essar Oil in lieu of re-negotiating the contract.
