New Delhi: India is willing to pay up to $4.5 per million British thermal units (mBtu), which is 50 per cent higher than the one agreed in June last year, to buy 5 million tonnes of Liquefied Natural Gas (LNG) from Iran.
Iran had asked for a revised higher price for the 5 million tonnes LNG deal it had signed last year with India.
GAIL (India), Indian Oil Corporation and Bharat Petroleum had signed a 25-year deal with National Iranian Gas Export Co in June 2005 to buy 5 million tonnes of LNG a year at a price linked to $31 a barrel of crude oil, which translates to $2.9 per mBtu.
But Tehran has not ratified the agreement because of a sharp rise in oil prices, and has been demanding India pay more.
As per the formula agreed last year, Iran was to charge India 6.5 per cent of the Brent crude oil price at the time of loading of each consignment plus a fixed price of $1.2 per mBtu. Price, according to this formula, was to be capped at $3.215 per mBtu at $31 a barrel Brent price. For the initial two years, a 10 per cent discount was allowed leading to a price of $2.9 per mBtu from 2009 to 2011.
Tehran had sought a higher ceiling of $65 per barrel, at which the free-on-board price would come to $5.425 per mBtu.
To this $0.30 per mBtu would be added for transporting the gas in its liquefied form in specialised tankers from Phase 12 of the gigantic South Pars as field.
Petroleum Minister Murli Deora had last month agreed to Iran's demand for renegotiations of LNG price.
India imports more than 70 per cent of the fuel it consumes and wants to ensure adequate supplies to sustain an economy growing at more than 8 per cent a year.
Though global price of LNG has softened over the last few months in tandem with the drop in crude oil prices, the shortage in supplies and continuing volatility in global market has ensured that gas prices, including for long-term supply remains higher than the price of $3 or below per mBtu of LNG.
Comments
0 comment