Forget cheap gas, Iran tells India

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New Delhi, July 3: In what may derail the ongoing negotiations over implementing the $8 billion plus Iran-Pakistan-India (IPI) natural gas pipeline project, India has taken strong note of the comments made recently by the Iranian deputy minister of oil for international affairs, Mohd Hadi Nejad Hosseinian on pricing of its gas.

A note received on June 25 from the Indian mission in Tehran, addressed to ministry of external affairs (MEA) and the petroleum ministry, quoted Hosseinian saying, “Iran could not pay subsidies for supply of cheap gas to India and Pakistan who have kept gas price low in their domestic markets by providing subsidies. India and Pakistan should forget purchasing low price gas from Iran and they should take advantage of the opportunity of using the “peace” gas pipeline.”

The note further added that the proposed trilateral agreement over the gas pipeline does not bring any obligation and is not limitless as well. “Iran has the right to renew the agreement based on its conditions. Those who prohibit India and Pakistan from purchasing Iran’s gas will definitely be the first to buy Iran’s gas with the better prices provided that Iran’s nuclear dossier will be settled. At that time, India and Pakistan will have to compete with them or lose the opportunity,” the note added. The meeting of ministers of India, Pakistan and Iran already stands postponed by at least a month. Oil ministers of Iran, Pakistan and India were to meet in Tehran next month to finalise modalities for implementing the IPI pipeline project.

As India and Pakistan have together proposed to import 150 million cubic meter of gas from Iran, which is one-third of the total gas sales considered for export by Iran, the latter is giving lot of weightage to the price at which gas is sold.

Iran has forwarded a gas pricing formula wherein the gas price is linked to brent crude oil with an escalating cost component of around 3% annually. Both India and Pakistan are not in favour of this formula and are insisting on having a floor and a ceiling.