February deadline for India's response to Iran gas price

Vol 10, PW 20 (08 Feb 07) People & Policy

India has been told by Iran in the clearest possible terms that it needs to give an answer in writing by no later than the end of this month (February).

“There will be no more meeting or discussions on the pricing issue,â€‌ we hear. “India must clearly say â€کyes’ or â€کno’ by the end of this month.

â€‌ As for the issue of transit fees and pipeline transportation costs through Pakistan, “this is entirely a bilateral issue between India and Pakistan.â€‌ Given the February-end deadline, bureaucrats in the oil ministry have a busy time ahead.

They must first work out the transit fees and the cost of the pipeline through Pakistan and then seek approval of the “derivedâ€‌ gas price from the power and fertiliser sectors, both seen as critical anchor customers for Iranian gas. Sometime this week, we hear, India will begin talks with Pakistan over transit and transportation fees.

What happens at the end of February if India still disagrees In the past Iran has repeatedly said that it would lay the pipeline exclusively to Pakistan, which now looks increasingly possible if India stays out. “Pakistan’s domestic gas supply sources are depleting fast,â€‌ we learn.

“It needs an alternate supply system as early as next year.â€‌ Pakistan does not have LNG import terminals like India.

Still, if India agrees on the price quoted by Tehran, there is hope: the three countries are scheduled to meet again in Islamabad by the end of February to move the project forward. Only one subject dominated the agenda of the 25th January meeting in Tehran: discussion and agreement on the price of gas to be sold by Iran to India and Pakistan.

Helping them was a gas pricing report jointly commissioned by the three countries and submitted on 22nd November by the Singapore offices of UK consultant Gaffney, Cline & Associates. Oil ministry special secretary Anil Razdan led India’s delegation to the talks.