Iran rejected India’s demand for international long-term contracts gas price
parity insisting that it will sell for at least USD 7.2 per British thermal
unit (mbtu) price while the international long-term gas price is USD 4.2 mbtu
for the Iran-Pakistan-India pipeline. This rejection dashed hopes that India
fast-tracking the project.
Iranian Oil Minister Kazem Vaziri-Hamaneh ridiculed the Indian offer as
“subsidized domestic prices” and aggressively noted that they “have no
obligation to sell it at the price lower” that what they think is the “real
one.” Iran’s gas pricing formula is linked to Brent crude oil with a fixed
escalating cost component that equals 10% of Brent crude oil and a 3% annual
escalation which Tehran says is USD7.2 per mbtu but without a floor and ceiling
price. Indian sources say that this quote is 50% of the prevailing market
determined gas price in India which makes it too expensive and New Delhi is
opposed to both the Brent crude oil price linkage and the absence of floor and
India wants to import 90 million standard cubic meters of gas per day (mscmd)
from Iran through the 2100-km long pipeline while Pakistan has indicated a
requirement of up to 60 mscmd. As an energy-deficit nation and despite doubts
of security, Pakistan’s credibility as a transiting nation, and insurgency
threats, India is planning to invest USD 7 billion for the project which is
seen to benefit all three nations.
The third tripartite talks will be held August 3-4.
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