Iran rejects Indian gas price offer

Iran has rejected India's demand for a price equivalent to international long-term gas supply contracts for the Iran-Pakistan-India pipeline gas saying New Delhi should forget about buying Iranian gas at a low price.

Tehran is seeking at least 7.2 dollars per mBtu price for gas it wants to sell to India and Pakistan through the over 7 billion dollar pipeline while New Delhi is willing to pay no more than 4.2 dollars per mBtu for gas delivered at its border.

Iranian Oil Minister Kazem Vaziri-Hamaneh, ahead of the meeting of Oil Secretaries of the three countries in New Delhi on August 3-4, termed the Indian offer as based on "subsidised domestic prices" and said Tehran will not sell its gas at the proposed price.

"If the Indian side is not ready to buy our gas at its real price, we have no obligation to sell it at the price lower than the real one," he was quoted as saying by the Iranian Oil Ministry's news agency PIN.

He said India and Pakistan should forget about buying Iran's gas at a low price.

The third meeting of the tripartite working group on the IPI gas pipeline project would be held here on August 3-4.

Iran had forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent crude oil). Tehran is seeking a price of 7.2 dollars per mBtu, with a three per cent annual escalation.

"This price is more than 50 per cent the prevailing market determined gas price in India," a source said.

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 source said.

"New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling," he added.

Incidentally, Pakistan has also rejected the formula.

The official-level talks would be followed by a meeting of energy ministers of the three countries in Tehran to finalise modalities for implementation of the project.