The Hindu : National : Focus on energy during Iranian President’s visit

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Focus on energy during Iranian President’s visit

Sujay Mehdudia

LNG deal, IPI pipeline and other joint ventures to be discussed

Mahmoud Ahmadinejad

NEW DELHI: With India having spurned U.S. advice on dealing with Iran, the one-day visit of Iranian President Mahmoud Ahmadinejad to New Delhi on April 29 will have energy as the focus. The pending $22 billion LNG deal, the $7.4 billion Iran-Pakistan-India pipeline and exploration and production joint ventures in Iran will top the high-level talks between the two countries.

Mr. Ahmadinejad’s visit comes at a significant time when India is working aggressively in the world theatre to acquire oil and gas assets in an attempt to meet its growing demand for energy.

Officials in the Petroleum and Natural Gas Ministry are upbeat about the visit. They feel it would provide a “big opportunity” to India to consolidate its position and secure further assurance and concessions from Iran in the energy sector.

New Delhi is hoping that its stalled talks on the $22 billion Liquefied Petroleum Gas (LNG) deal with Iran will hit a new direction with Mr. Ahmadinejad’s visit.

Petroleum and Natural Gas Minister Murli Deora visited Iran early last year and pleaded with the government to settle the deal on equal terms. He had met the Iranian President and pleaded for the LNG deal to be taken up on a priority basis and all formalities to be finalised so that a final agreement is reached next month.

However, problems relating to the LNG deal continued in the wake of Iran’s insistence that the price should be re-negotiated. India had conveyed to Tehran that it should supply 5 million tonnes of LNG annually at the price agreed upon in June 2005 ($3.215 per million British thermal unit) and New Delhi was willing to pay a higher price for an additional 2.5 million tonnes a year.

The June 2005 contract had linked LNG prices with the Brent crude oil price with a cap at $31 a barrel. However, the Supreme Economic Council of Iran objected to the agreed price and wanted the deal to be re-negotiated. Iran wanted to raise this ceiling to $55, raising the LNG price to $4.78 per mBtu. India said it was willing to pay $4.78 per mBtu for the additional LNG, thereby averaging the cost for 7.5 million tonnes of LNG to $3.74 per mBtu.

Similarly, the $74 billion Iran-Pakistan-India pipeline will also figure in the talks that New Delhi will have with the visiting Iranian President.

India is also looking at increasing its participating interests in various oil and gas projects in Iran.

Officials said India would push for a public-private partnership agreement with Iran and would seek Iranian investment in the downstream sectors in India.

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