SINGAPORE, Sept 7: India and Pakistan have two months to agree with Iran on a major natural gas pipeline or Tehran will earmark more of its reserves for liquefied natural gas (LNG) projects, a senior official said on Thursday.
Talks on the $7 billion gas pipeline from Iran — home to the world’s second-largest natural gas resources — through Pakistan to India have stumbled recently as Tehran has asked nearly twice the rate that New Delhi wants to pay.
“(They) are not prepared to pay the real price of gas in the market, therefore we are reviewing increasing the capacity of gas allocated to LNG,” Mohammed Hadi Nejad-Hosseinian, Iran’s deputy oil minister for international affairs, said at a conference in Singapore.
“We may increase the capacity to these LNG projects and decrease capacity allocated to the pipeline.” Separately he told Reuters: “We have to decide in a maximum of one and a half to two months (on the pipeline).” Past deadlines set by Iranian officials for completing major energy projects have often been missed as negotiations on key deals can carry on for years.
India, Pakistan and Iran agreed last month to appoint an outside consultant to suggest a price for the gas. Iranian officials had offered a price linked to Dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu. Nejad-Hosseinian said on Thursday that they were now working to change the pricing formula to one based on LNG import prices to Japan, the world’s biggest consumer of the fuel, taking into account the cost of freight and transport.
India is trying to eliminate power shortages by securing new sources of energy, while Iran is eager to finally tap into its mostly undeveloped gas resources. But New Delhi is also weighing the cost of using cleaner fuel natural gas against more abundant but dirtier domestic coal. It has already agreed a landmark civilian nuclear co-operation deal with the United States to boost its atomic power capacity, forcing it to walk a fine line in dealings with Tehran.-—Reuters
