India, Pakistan oppose Iran gas price forumla | india | Hindustan Times
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India, Pakistan oppose Iran gas price forumla

They demanded that Tehran has to offer a price in line with international practices for long-term contract.

india Updated: Aug 03, 2006 16:07 IST

India and Pakistan on Thursday opposed Iran's demand for a higher price for gas it wants to export to the two countries through a seven billion dollar pipeline.

Oil secretaries of the two countries, who had an informal meeting on Wednesday evening to devise a common strategy for the third round of tripartite talks on the pipeline beginning Thursday, opposed Iran's proposal.

They demanded that Tehran has to offer a price in line with international practices for long-term contract, sources said.

The last round of talks between oil secretaries of the three nations in Islamabad on May 22-23 had broken down after Iran sought a price linked to international crude oil.

Iran had forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent crude oil).

The formula translates into a price of 7.2 dollars per million British thermal unit (mBtu), with a three per cent annual escalation.

The 3rd meeting of the tripartite working group on the IPI gas pipeline project is to be held on August 3-4.

India wants to import 90 million standard cubic meters of gas per day from Iran through the 2,100-km long pipeline while Pakistan has indicated a requirement of up to 60 mmscmd.

Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price. "New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling," a government official said.