TALKING IT OUT: Petroleum and Natural Gas Minister Murli Deora (left) with Iranian President Mahmoud Ahmadinejad in Tehran on Thursday. Mr. Deora made an unscheduled stopover in the country to salvage a $22 billion deal to import natural gas after Iran refused to ratify it demanding that India increase the price. — PHOTO: AFP

NEW DELHI: Petroleum and Natural Gas Minister Murli Deora on Thursday met Iranian President Mahmoud Ahmadinejad and sought an assurance for early implementation of the June 2005 agreement providing for supply of 5 million tonnes of Liquefied Natural Gas (LNG) to India at a total cost of $22 billion.

Mr. Deora, who made an unscheduled stopover in Iran on Wednesday evening, rushed in to save the agreement after the Economic Supreme Council of Iran refused to ratify the LNG agreement demanding that India make an upward revision in the price. Mr. Deora also met his Iranian counterpart, Kazem Vaziri Hamaneh, and Iranian Foreign Minister Manouchehr Mottaki.

High-level delegation

Officially, the visit was termed part of high-level regular exchanges. Mr. Deora was accompanied by a delegation comprising Petroleum Secretary M.S. Srinivasan and the chairmen and managing directors of the Oil and Natural Gas Corporation, the Gas Authority of India Limited and Engineers India Limited.

During the talks, both sides stressed on the traditional and friendly ties between the two countries. They recognised that energy sector constituted a key element in Indo-Iran commercial relations.

The June 2005 agreement also came up during the discussions that included bilateral contract for supply of 5 million tonnes of LNG (per annum) from Iran to India from the proposed Iran-Pakistan-India gas pipeline project. The Supreme Economic Council has not ratified the deal at the two-year-old price of $3.215 per million British thermal unit (mBtu). Tehran has sounded India that it now wants $5.1 per mBtu for the LNG. On its part, India was ready to offer a higher price for the additional 2.5 million tonnes of LNG that India wants beyond the already contracted volumes.

Mr. Deora stressed the need for early implementation of the LNG contract and reiterated India's commitment to the gas pipeline project. The Minister conveyed the growing interest and keenness of India's private sector to participate in Iran's economic development in cement, steel, fertilizers, pharmaceuticals and automobiles sectors.

Mr. Ahmadinejad reassured Mr. Deora that the Iranian side was also committed to the project, which would be implemented to mutual satisfaction. The President is understood to have advised the Iranian Oil Ministry to look at ways to ensure early implementation of the LNG contract.

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