India set to buy gas from Iran

India is likely to sign a deal with Iran this week to purchase 5 million tonnes of liquefied natural gas (LNG) from Iran in return for Tehran offering a stake in an oil field.

Petroleum Secretary SC Tripathi will be leaving for Tehran tonight along with Indian Oil Corporation (IOC) Chairman and Managing Director (CMD) MS Ramachandran and Director NK Nayar. GAIL India CMD Proshanto Banerjee left for Tehran early Monday.

Iran has offered to sell the gas at $2.57 per million British thermal unit (mbtu) but India is insisting on $2.4 mbtu. Petronet LNG is buying LNG from Qatar at about $2.53 mbtu.

Iran has agreed to give ONGC Videsh a 20 per cent stake in Yadevaran oilfield, which has a potential of 300,000 barrels per day. ONGC Videsh is also bidding for a majority stake in the field. The National Iranian Oil Company's will dilute its share of 49 per cent for the deal.

Under the deal, GAIL and IOC will buy up to 5 mtpa LNG from Iran under a 20-year contract beginning 2008-09. The offer price will remain fixed for the first five years from the date of beginning of supplies, after which the price will be renegotiated.

India is likely to receive deliveries at PLL's Dahej terminal in Gujarat or the upcoming Kochi terminal in Kerala. The Dahej terminal is being expanded to handle 10 mtpa while Kochi will handle 2.5 mtpa to start with.