India, Pak to make joint proposal on gas pipeline | india | Hindustan Times
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India, Pak to make joint proposal on gas pipeline

The two energy starved neighbours want to import natural gas from Iran through an over $7 billion pipeline.

india Updated: Aug 02, 2006 12:04 IST

India and Pakistan are likely to present a joint proposal on pricing of natural gas, which the two neighbours want to import from Iran through an over $7 billion pipeline.

"India and Pakistan are coordinating their response to Iran's offer price of gas it wants to sell to the two countries through the Iran-Pakistan-India pipeline.

In all likelihood the two countries will present a joint proposal when the officials of the three countries meeton Thursdayafternoon," a government official said.

The last meeting of oil secretaries of the three nations in Islamabad on May 22-23 broke off after Iran sought a price linked to international crude oil.

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

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 per million British thermal unit (mBtu), with a three per cent annual escalation.

The official said New Delhi was willing to show some flexibility in its earlier stand of paying not more than $4.25 per mBtu price of gas delivered at its border.

India wants to import 90 million standard cubic meters of gas per day from Iran through the 2100-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, he said. "New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling."

Incidentally, Pakistan has also rejected the formula.