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Aiyar to fix LNG deal in Iran

December 01, 2004
Source:PTI
Petroleum Minister Mani Shankar Aiyar will visit Tehran early next week to salvage the LNG-for-oil field deal, which hit an obstacle after Iran sought a very high price for liquefied natural gas it plans to sell to India.

"I will be visiting Tehran to attend a conference. I will also try to finalise the LNG deal, which appears to have run into rough weather," Aiyar told PTI in New Delhi.

At the last round of talks in Tehran late last month, Iran offered to sell 7.5 million tonnes of LNG to India at a price linked to Brent crude oil.

It also doled out one more oil field to Indian firms to make New Delhi accept the LNG price that came to over $4 per million British thermal unit at current crude prices.

Petroleum secretary S C Tripathi, who led the Indian side, declined to accept Iranian formula, which arrived at the free-on-board price of LNG by taking 0.065 per cent of the prevailing Brent crude oil price and adding a fixed cost of $1.20 per mBtu.

At current Brent crude oil price of over $45, a barrel, Iranian LNG would cost $4.125 per mBtu, more than 60 per cent higher than $2.53 per mBtu price which New Delhi is paying Qatar to buy a similar quantity of LNG.

After returning from Tehran, Tripathi said, "There was no agreement on the LNG price though the two countries reached an accord on developing the Yadavaran oil field (which Iran was offering to Indian companies to get New Delhi to buy 5 million tonnes of LNG)." Additionally, Iran offered Juffair oil field but wanted New Delhi to buy 7.5 million tonnes of LNG.

Source: PTI
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