Iran wants oil-linked price for IPI pipeline gas

Iran is seeking a price linked to the international crude oil price for the natural gas it wants to sell to India through the $7-billion Iran-Pakistan-India (IPI) pipeline.

"Iran has forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10% of Brent crude oil)," a top government official said.

Tehran is seeking a price of $7.2 per million British thermal unit (mBtu), with a 3% annual escalation."This price is more than 50% the prevailing market determined gas price in India," the official said. New Delhi is not willing to pay more than $4.25 per mBtu price of gas delivered at its border.

India wants to import 90 million standard cubic meters of gas per day from Iran through the 2100-km long pipeline, while Pakistan has indicated a requirement of upto 60 mmscmd.

Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price, the official said, adding: "New Delhi is opposed to both linkage with Brent crude oil and absence of floor and ceiling."