With India reluctant to pay a higher price for the liquefied natural gas contracted in 2005, Iran has proposed to sell the fuel to the Indian private sector."Yes, one of the proposals is to sell the (5 million tons a year) LNG to private companies once government-run firms withdraw (from the contract)," said H Ghanimi Fard, special representative of Iran's Petroleum Minister in New Delhi.
The IOC-GAIL-BPCL combine in June 2005 signed a 22-billion dollar deal to import 5 million tons of LNG from Iran beginning 2010. However, the new government in Tehran has refused to honour the deal unless a higher price is paid and has begun dialogue with private sector firm to sell that gas.
Iran has sent feelers to Indian government seeking transfer of the volumes committed in 2005 to private firms.
But New Delhi is not impressed and wants Tehran to fulfil the 2005 commitment first and it could sell additional LNG to private firms like Essar and Anil Ambani Group.
Ghanimi said Iran had put forward options for reviving the LNG deal and it was for New Delhi to respond. He did not elaborate on the options but clearly indicated that Tehran
would not settle at the June 2005 agreed price. "The price has to be raised," he said.
Indian officials, however, said Iran should supply 5 million tons a year of LNG at the June 2005 agreed price of 3.215 dollars per million British thermal unit (mBtu) and New Delhi was willing to pay a higher price for an additional 2.5 million tons a year of LNG.
The June 2005 contract had LNG prices linked the Brent crude oil price with a cap at 31 dollars per barrel. Iran now wants to raise this ceiling to 55 dollars, raising the LNG price to 4.78 dollars per mBtu.
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