Iran, India soften stand on gas deal

Indications emerged today on the possibility of India and Iran reviving an LNG deal struck last year and reaching an agreement on a tri-nation gas pipeline even as Tehran said it was ready to raise quota of oil and gas to New Delhi.

"They have given us a new offer and now we will start working on that," Petroleum Minister Murli Deora said after a meeting with Iran's Foreign Minister Manouchehr Mottaki that lasted for more than an hour.

"I hope and I am confident that before the end of the year, we will be able to finalise these two important projects (Iran-Pakistan-India pipeline and LNG deal)," Mottaki told reporters here

On the LNG deal, India said it was willing to raise its offer slightly for importing of five million tonnes of natural gas from 2009.

The deal between the two nations turned cold after New Delhi rejected Tehran's demand for a price of $5.10 per mBtu, as against the agreed price of $2.90 per mBtu. Deora said that the Iranian minister had indicated that the price offered by India was very low and must be re-negotiated.

"A little more price is OK but the new price should not be much higher than what we had offered," he said, adding, "with the new formula I am very hopeful that the deal will fructify."

Mottaki said India and Iran complemented each other as India wanted gas for its development plans and Iran wanted to earn revenues from gas exports.

"I am optimistic that with further negotiations on a specific formula, you will receive gas very soon," he said.

Deora said the next bilateral talks on the LNG deal between the two countries would be held soon. He also indicated that India might ask for raising the volume of LNG to be imported.

India had originally sought to import 7.5 million tonnes of gas, of which the price was negotiated for five million tonnes last year. "But that (increasing volume) would happen only after we finalise this deal," he said.

On the multi-billion dollar Iran-Pakistan-India (IPI) natural gas pipeline, Mottaki said "We are waiting for the final report of the consultants and will continue our negotiations, both bilateral and trilateral, to reach a common ground and implement the huge project."

Deora said the next secretary level talks between the three nations will be held within a month in Tehran to review fixation of gas prices. Talks are currently stalled over gas pricing, as the rates proposed by Tehran are much higher than what was envisaged.

The three nations have appointed UK-based consultants Gaffney, Cline & Associates to advise on the natural gas price to be supplied to India and Pakistan from Iran. A decision to appoint an international consultant was taken after a two-day secretary level trilateral meeting in August failed to reach a breakthrough on the issue of gas price.