INDIA to sign gas import deal with Iran in June

India is likely to sign by June a 145 billion dollar deal to import natural gas from Iran through the proposed Iran-Pakistan-India (IPI) pipeline after Tehran lowered the sale price by 30 percent.

"On preliminary analysis, the new price offered by Iran looks alright for us. Subject to satisfactory conclusion of the Gas Sales and Purchase Agreement, we may sign a deal with Iran by June," Petroleum Minister Murli Deora said today, a PTI report said here.

At 60 dollars per barrel crude price, the cost of gas at Iran-Pakistan border translates into 4.93 dollars per mBtu according to the new price formula proposed by Iran at the official level talks at Tehran on January 24-25.

As per the previous formula, proposed in August 2006, gas price came to 7.2-dollars per mBtu at 60 dollars per barrel crude oil price.

Besides, India would pay 1.5 dollars per mBtu for piping gas through Pakistan and transit fee to Islamabad.

Petroleum Secretary M S Srinivasan said, "the price looks comfortable."
At 4.93 dollars per mBtu, India will pay 5.768 billion dollar annually to buy 90 million standard cubic meters per day of gas.

Pakistan had agreed to the price offered by Iran at the trilateral official level talks in Tehran last month.

"Officials of India and Pakistan will meet this month to synchronize various issues," he said.

An official, however, said the 4.93 dollars per mBtu price was very high as market determined price for domestic gas in India was around 4.50 dollars per mBtu.

"If the Iranian proposal is accepted that would mean a delivered price of close to 6.5 dollars per mBtu at Rajasthan border. We certainly cannot set that kind of a benchmark for gas to come from new fields like that of Reliance Industries and Oil and Natural Gas Corp in the KG basin," he said.

Previously, India and Pakistan had expressed willingness to pay 4.25 dollars per mBtu delivered price for gas through the 2,100-km line at Iran-Pakistan border but at the January meeting in Tehran, Islamabad broke ranks with India and signed a preliminary agreement with Iran at the new price.

The official said Iran's new formula has a floor (minimum price) of 30 dollars a barrel of JCC and a ceiling (maximum price) of 70 dollars per barrel.

Price of gas will be on the agenda of External Affairs Minister Pranab Mukherjee's two-day visit to Tehran from today.