Visiting Iran’s Deputy Oil Minister Hadi Nejad Hosseinian informed stunned Government officials that the much-publicized and anticipated USD 22 billion-mega deal to bring Liquefied Natural Gas (LNG) from Iran is dead. This move was expected as an earlier business delegation of Gas Authority of India Limited (GAIL) and Bharat Petroleum Corporation Limited (BPCL) was given a waffling message by Iran’s National Iranian Gas Export Corporation (NIGEC) that it needed
This was surprising to the Indian companies, which believed that this waffling was because of India’s vote against the Iranian Nuclear Program at the International Atomic Energy Agency (IAEA) in September 2005. Later, NIGEC told their Indian customers that it reserves the right to withdraw from the deal if the price of crude goes beyond USD 80 a barrel. Disappointed and agitated Indian companies said that Iran wanted open-ended contracts when a previous Government already aggressively negotiated the 5 million metric tons per annum (mmtpa) LNG deal. The only condition of that deal was that NIGEC’s parent company National Iranian Oil Company (NIOC) had to ratify it in a month which it never did. It is not clear why the Indian customers or then Petroleum Minister Mani Shankara Aiyar did not raise the issue with NIOC or whether that was done but disregarded by Iran..
The Iranian Government believes that its previous Government “undersold” the LNG and Petroleum Minister Murli Deora said, “The main difference was price.” Hosseinian told reporters that Iran has sought legal opinion and thought it was all right for it to walk away from the deal. He refused to say whether they would have to pay damages to India. Deora said that “Iran is a friend” and that India “will continue to engage with them.” He did not say whether India would enforce contractual obligations against Iran.