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India, Iran reach pact for LNG supply

By Our Special Correspondent

NEW DELHI, JAN. 7. India has tied up with Iran for supply of 7.5 million tonnes annually of liquefied natural gas for 25 years as part of the bilateral cooperation between the two countries through several agreements inked today. The supplies are likely to start in 2009.

Under the agreement, Iran will supply the LNG at $1.2 plus $0.0625 of Brent per million British thermal unit (mBtu). Tehran has also agreed to give India 20 per cent stake in the development of its biggest onshore oilfield, Yadavaran.

"We have reached an agreement. It would be formalised and signed soon," the Iranian Oil Minister, Bijan Namdar Zanghneh, said confirming the tie-up after his meeting with his Indian counterpart, Mani Shankar Aiyer.

State-run Indian Oil Corporation and Iranian firm Petropars will by February 28 submit a plan to develop a gas block in the gigantic South Pars gas field of Iran and sell LNG from it. It is planned to set up LNG liquefaction facilities with a capacity of nine million tonnes annually. The project is estimated to cost $3.2 billion.

The Iranian Government and the National Iranian Oil Company (NIOC), which owns the South Pars fields, have agreed for a favourable consideration of the proposal.

The two entities will also set up a liquefaction plant in South Iran, which is planned to export nine million tonnes annually of LNG to India and other countries. IOC will lift 4.5 million tonnes of LNG for 25 years for marketing in India. The gas block in South Pars field was beside the Yadevaran and Jufeyr oilfields, which Tehran today offered to New Delhi in lieu of India buying 7.5 million tonnes annually of LNG. The Yadevaran oilfield has a potential to produce three lakh barrels a day.

He said NPC had also offered IOC participation in its 12th olefin complex, under implementation at Bandar Assaluyeh.It also offered to the Indian companies the opportunities for investments for producing fertilizer, ethylene, methanol, and ammonia in Iran besides energy intensive projects, namely, producing aluminium, cement and steel in Iran.

Mr. Aiyar said GAIL had signed an agreement with Iran Fuel Conservation Organisation (IFCO) for cooperation in CNG related opportunities.

GAIL had proposed making investment for developing CNG infrastructure in Tehran and Esfahan.

An Iranian delegation would visit India on the eve of Asian Gas Buyers' Summit scheduled for February 14 to initiate discussions with their Indian counterparts on a term chart relating to possible Iranian gas import through an overland pipeline at the India-Pakistan border, he said, though security of gas supplies to India through the 2,775-km pipeline, 760-km of which would pass through Pakistan, remained a key issue.

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