Consultant to look into price of Iran pipeline gas

Differences over the price of natural gas to be imported through the Iran-Pakistan-India (IPI) pipeline persisted today, but the three countries agreed to appoint an international consultant to look into the issue.

"The three countries have agreed to appoint an international consultant to look into the pricing of gas," Petroleum Secretary MS Srinivasan told reporters after talks held by the three countries.

Iranian Deputy Oil Minister MH Nejad Hossenian said all sides insisted on the importance of the project and further talks would be held based on the consultant's report.

The consultant, to be appointed by the three countries, would submit its report in a month's time, after which government officials would meet again in Tehran. Pakistan Oil Secretary Ahmed Waqar said Pakistan and India agreed with each other on the issue and were looking at a price affordable and reasonable for domestic markets.

"We are pursuing a bilateral (Iran-Pakistan) pipeline and a trilateral (IPI) pipeline in a parallel manner. If, for any reason, India does not join the IPI project, Pakistan will go ahead with the bilateral project subject to the price being affordable," he said.

Sources said an international consultant was needed because there were substantial differences between buyers and sellers on transportation and gas-processing costs.

The tripartite expert committee, which was formed yesterday to look into the pricing issue, failed to resolve differences, with Iran insisting on a transmission cost of $1.2 per million British thermal unit, and India and Pakistan suggesting one-fourth of this cost.

On gas processing, Iran said $0.4 per mbtu would be charged, but the buyers said $0.2 was a reasonable price, sources said. Tehran has remained adamant on its crude-oil-price linked formula, which, at $60 a barrel Brent crude price, translates into a price of $7.2 per mbtu "" 60 per cent more than what India was willing to pay.

Sources said Iran wanted a price equivalent to 10 per cent of the ruling Brent crude oil price, plus a fixed cost of $1.2 per mbtu. At $60 per barrel "" the average Brent price during recent times "" this translates into a price of $7.2 per mbtu at the Iran-Pakistan border. Added to this would be the cost of transporting the gas through Pakistan.

New Delhi, however, is willing to pay no more than $4.25 per mbtu for gas delivered through the 2,100-km line at its border, they said.