Iran earthquake delays talks over LNG to India

Vol 7, PW 21 (14 Jan 04) People & Policy

India has postponed a visit to Iran for further talks on the import of LNG because of last months devastating earthquake.

PETROWATCH learns an Indian team led by GAIL, and including representatives of Indian Oil, ONGC and Oil India, was scheduled to visit Tehran on 5th January. We have decided to postpone the visit to the second half of February, reveals a GAIL source.

It didnt seem right to go and talk business when the need now is humanitarian aid to the earthquake affected people. The 5th January meeting was called to carry forward discussions with state-owned National Iranian Gas Export Company on the term sheet for the import of 5m t/y LNG from Iran over 25 years.

We were expecting to freeze the term sheet and the price band during the 5th January meeting. For now the only outstanding issue is the price at which Iran will sell LNG to India.

The quantity, the time period and the source have been resolved. GAIL believes the Iranian LNG price will be lower than the RasGas price to Petronet-LNG at Dahej.

GAIL also believes Iranian LNG can compete with domestic gas from Reliances Krishna Godavari discovery and others like it. Otherwise, it makes no sense to buy Iranian LNG.

The GAIL-led consortium has drawn up a pricing structure and formula that it will submit to Iranian officials. GAIL believes Iranian LNG must land on the west coast.

It has to be at a western Indian port, adds our source. It could be Dahej because we are one of the promoters and have leverage with Petronet-LNG.

Dahej can import 5m t/y LNG and Petronet-LNG is studying the feasibility of doubling capacity. Petronet-LNG is contracted to import 7.5m t/y LNG from RasGas, we are told.

If (Petronet-LNGs) Kayamkulam terminal does not come up, Dahej will have to take in 7.5m t/y from RasGas. Capacity will then have to be increased to 12.5m t/y to accommodate the Iranian LNG.