Alongside, India will shortly finalise the sales and purchase agreement for importing 5 million tonne per annum of liquified natural gas (LNG) from Iran. GAIL (India), the lead agency for negotiating LNG imports, has already held three rounds of talks with the National Iranian Gas Exporting Company (NIGEC) on the term sheet for LNG SPA. A 20 per cent equity participation of GAIL in the LNG project is also being discussed with NIGEC.
Officials disclosed that discussions on these issues took place last week between petroleum secretary, BK Chaturvedi and a senior Iranian minister during their visit to Amsterdam for attending the 9th International Energy Forum. A high level government-to-government meeting is now expected to take place in June end to finalise details of the Indo-Iran co-operation in the oil and gas sector.
Back home, a high level meeting was called by Mr Chaturvedi on Friday where co-operation with Iran in areas of exploration, LNG imports and petrochemicals was discussed. Present at the meeting were IOC chairman and managing director MS Ramachandran, GAIL CMD Proshanto Banerjee, OVL MD R Butola and senior petroleum ministry officials.
According to officials, GAIL has informed the ministry that a pricing formula for LNG imports has already been worked out among the working groups and the GSA is expected to be signed between GAIL and NIGEC in the next two months.
Indications are that the price negotiated with the Iranians for LNG is around 30 per cent cheaper than price of imported LNG from Qatar. This will create a tough gas-to-gas competition between RasGas, Shell and Reliance on the west coast, a senior ministry official said.
It may be noted here that under a memorandum of understanding (MoU) signed between India and Iran, during the visit of President Khatami to India in January 2003, it was agreed that while India will buy LNG (5 million tonnes per annum in Phase I) from Iran, the latter will offer suitable discovered/semi-discovered oil fields to India on nomination basis.
The petroleum ministry had, however, expressed concerns over the fact that not much progress has been made by the Iranians in offering suitable discovered and semi-discovered oil fields to India. It was noted in the last review meeting taken by secretary petroleum on March 18, 2004 that in September 2003, the Iranian side had offered three discovered/semi-discoverd fields including Cheshmeh Khosh, Parsi and North Azadegan to OVL along with a possible participation in four exploration blocks.
On studying the data provided, while the North Azadegan field was not found worth pursuing, OVL found Chesmeh Khosh and Parsi to be worth pursuing further. The same was conveyed to the Iranians in January 2004.
However, OVL later lear that the development of the Cheshmeh Khosh field has been entrusted to a subsidiary of National Iranian Oil Company (NIOC). Considering the risk capital involved, Parsi field on stand alone basis was not considered worth pursuing further.
Then again at the end of November 2003, an Iranian high level official indicated at a meeting convened by the ministry of external affairs in Delhi that the Iranian side was willing to offer 40 per cent interest in South Azadegan to OVL for which the latter conveyed its interest for participating in this project. The matter, however, could not be pursued further as NIOC later signed the field development contract for this field with a Japanese consortium, as per the recorded minutes of the review meeting.