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India threatens to pull out of gas pipeline project
The Petroleum Minister said that Tehran has to price the natural gas at rates affordable to industry in India.
India on Wednesday threatened to pull out of the proposed $4.16 billion Iran-India pipeline project over price of natural gas saying Tehran has to price the fuel at rates affordable to industry in India.
"We will not buy gas from Iran if we cannot sell it in India... If they say they have alternate markets in US, China and Japan (who are willing to pay higher price) than I might as well ask them to tap them," Petroleum Minister Mani Shankar Aiyar said at book release function in New Delhi.
Iran wants a price equivalent to that of liquefied natural gas (LNG) for the natural gas it plans to sell to India by the pipeline, which would pass through Pakistan.
"In our country, paying capacity of (key consumers) power and fertiliser sector has kept in mind for pricing of the feedstock (gas). We can buy the energy provided we can afford the price," he said.
LNG is twice as costlier than domestically produced natural gas.
Aiyar said India and Pakistan together need some 200 million standard cubic metre per day (mmscmd) of Iranian gas and Tehran has to offer special price to such large consumers.
International consultant BHP Billiton of Australia had pegged cost of Iranian gas through a pipeline at 2.40-2.49 dollars per mBtu.
Besides the high price of the 'lean gas' (natural gas stripped of petrochemicals), Iran was also not willing to sign 'supply- or-pay' contract, which would make it liable to deliver the gas at Indian borders or else pay for the assured quantity.
Tehran however wants New Delhi to commit to a stringent 'take-or-pay' clause where India will have to pay the price even if it does not take delivery of gas.
The 2600-km long pipeline would originate at the Persian Gulf port city of Assaluyeh (the landfall point of gas produced in South Pars gas fields) and travel 1100-km in Iran to reach Pakistan border.
In Pakistan, the pipeline will traverse 760-km to reach Indian border. Another 700-km line would be laid from Rajasthan border to Delhi to stream the gas into the trunk HVJ pipeline.
