Iran has increased the price of natural gas it plans to sell to India through a pipeline passing through Pakistan to $7.2 per mBtu, which makes it the most expensive fuel in the country as of date.
Iran, which holds the world's second largest gas reserves, last month informed New Delhi that it will charge about 20 per cent more for the gas it will sell through the long-delayed Iran-Pakistan-India pipeline, sources said.
The move apparently has been triggered by the drastic fall in international crude oil prices which have dived from $147 a barrel in August 2008 to below $40 now.
While in the previously agreed formula, Iran was to charge 6.3 per cent of the 10-month average of crude oil plus a fixed $1.15 per mBtu, it now wants 12 per cent of the average crude oil price plus $1.1 per mBtu, they said.
In the old formula, taking crude price at $60 per barrel, the cost of gas at Iran-Pakistan border translated into $4.93 per mBtu. But according to the new formula, gas price will shoot up to $5.9 per mBtu although crude prices have crashed below $40 a barrel.
Besides, India would have to pay $1.1-1.2 per mBtu in transportation cost and transit fee for wheeling the gas through Pakistan, making it the costliest gas in the country.
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Sources said the new Iranian position was conveyed by its chief negotiator H Ghanimi Fard to the Indian Ambassador to Iran last month.
New Delhi is likely to reject the changes proposed, they said, adding that revision to important clauses like prices cannot take place outside a bilateral or a trilateral meeting between the concerned officials.
The latest Iranian price is among a series of flip-flops the Persian Gulf nation has done during the seven year negotiations. It had originally proposed to sell gas at $3.21 per mBtu.
Sources said Iran was not willing to commit to a supply- or-pay regime wherein it would have been held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries.
Iran has also side-stepped New Delhi's demand for a trilateral mechanism for securing delivery of gas at Pakistan-India border. All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad.