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India asks Iran to honour LNG contract

Iranian President Mahoud Ahmadinejad has been urged to maintain his nation's credibility by honouring the June 2005 contract.

india Updated: Apr 27, 2007 13:36 IST

India has asked Iranian President Mahoud Ahmadinejad to maintain his nation's credibility by honouring the June 2005 contract to sell 5 million tonnes of LNG annually to New Delhi.

Tehran, sitting on world's second largest gas reserves, may get business from elsewhere but will lose its credibility if it falters on the two-year old deal to sell LNG for 25 years at 3.215 dollars per million British thermal unit (mBtu) was the message Petroleum Minister Murli Deora gave to the Iranian leader when he called on him in Tehran on Thursday.

"We had a very good 50-minute meeting with the Iranian President at the end of which Ahmadinejad instructed his oil minister to look at ways of early implementation of the LNG deal," a top official said.

New Delhi has maintained that it has a water-tight legal case if Iran goes back on the June 2005 signed agreement where in National Iranian Gas Export Co (NIGEC) committed to delivering gas in its liquefied form to Indian consortium of GAIL-IOC-BPCL from end-2009 but will prefer dialogue to resolve issue rather than going for arbitration.

Iran is seeking a higher price of 5.1 dollars per mBtu for the LNG as its Supreme Economic Council will not ratify the deal at the earlier agreed price.

Petroleum Minister Murli Deora, who made an unscheduled stopover at Tehran on his way back from a week long trip to energy-rich Syria, Algeria and Egypt, followed his one-on-one with Ahmadinejad with meeting with the Islamic nation's Foreign Minister Manouchehr Mottaki to press for early implementation of the June 2005.

"Ahmadinejad reassured (Deora) that the Iranian side is also committed to the projects (LNG supply contract and a separate project to export gas through the Iran-Pakistan-India pipeline), which will be implemented to mutual satisfaction," the official said.

Besides the deal to ship gas in its liquefied form, Deora also discussed the price expected by Iran for exporting gas through the proposed Iran-Pakistan-India pipeline. Iran is seeking 4.93 dollars per mBtu price for gas exports through the over 7 billion dollar pipeline.

Deora, accompanied by Petroleum Secretary MS Srinivasan, also met Iranian Oil Minister Kazem Vaziri Hamaneh.

India also expressed interest in procuring an additional quantity of 2.5 million tonnes of LNG per annum.