Iran lawmakers angry at cheap LNG offered to India

Vol 8, PW 10 (11 Aug 04) People & Policy

India can forget about getting cheap LNG from Iran.

On 24th and 25th July a team from GAIL and Indian Oil was in Tehran for more discussions on the import of 5m t/y LNG but returned empty-handed. PETROWATCH learns the Indian team was bluntly told that Iran is no longer willing to sell LNG to India at its previous offer of $2.22 per mmbtu.

The Indian team was informed that the price of $2.22 is no longer valid, a source tells PETROWATCH. Iran now refuses to go significantly below the $2.53 price that Petronet-LNG pays to RasGas for its Dahej LNG.

There could be a marginal difference but not a big difference from the Qatar price, he adds. Iranian LNG could be available at $2.52 or $2.51 per mmbtu but not at $2.22 per mmbtu.

In June, talks in Delhi with a visiting Iranian delegation made little progress because India insisted that Iran further reduce its final offer of $2.22 per mmbtu a move it must be regretting. Irans new hardline position on price follows uproar in Irans parliament (Majlis) when Iranian lawmakers learnt that India is being offered LNG at a heavy discount to the $2.53 per mmbtu charged by RasGas to Petronet-LNG.

Indias position is not helped by the fact that Iran knows it is desperate for LNG. News that Indian companies are travelling the world in search of LNG has reached Tehran.

Iranian lawmakers demanded to know why India should get significantly cheaper LNG when global demand is high and when it is already paying a much higher price for LNG from Qatar. Iran is also keeping a close watch on sales of Dahej LNG and, has carefully noted statements from Dahej LNG sellers (GAIL, Indian Oil and Bharat Petroleum) that 5m tonnes of LNG has already been sold.

All this has convinced Tehran it should sell LNG to India at only a slight difference to the RasGas price.