The Hindu Business Line : Iran hopes to get official nod soon for LNG deal with India — Tapping European technology for liquefaction of gas

PUTTING to rest any doubt pertaining to Iran's commitment to the five-million-tonne-a-year liquefied natural gas (LNG) deal with India, the Iranian Deputy Minister for International Affairs in the Ministry of Petroleum, Mr M.H. Nejad Hosseinian, today said that he hopes to get the ratification by Iran's High Economic Council soon.

Doubts were expressed whether the new Iranian regime would continue to be committed to the project.

He also reiterated Iran's commitment to the Iran-Pakistan-India (IPI) gas pipeline project. The three countries are planning to build a $7.4-billion pipeline to transport natural gas from Iran.

Speaking at the close of the two-day meeting of the third India-Iran Special Joint Working Group (SJWG) on the multi-billion IPI gas pipeline project, here today, he said, "I don't think India and Pakistan will yield to the US pressure." The Petroleum Secretary, Mr S.C. Tripathi, headed the Indian delegation.

Asked whether the technology for liquefaction of gas was available with Iran, he said his country was tapping European technology.

There were concerns about Iran's ability to convert natural gas into liquid form so that its transportation becomes easier. Currently, the technology for liquefaction of gas is vested in the hands of a clutch of US and European companies. Regarding the pipeline project, the Iranian Minister said he expects the project to start delivery of gas from 2011-12.

According to the roadmap finalised during bilateral talks between India-Pakistan, India-Iran and Iran-Pakistan this month, the three countries are ready to merge the talks to trilateral level with a Ministerial level meeting in Tehran in early March.

Prior to that, a trilateral official level meeting will be held in Tehran in February.

To overcome the threat of US sanctions, Mr Hosseinian said one of the options was that each of the three countries implements the pipeline in its own territory. "If we choose this option there will be no sanctions," he said.

The Iranian Minister, however, pointed out that despite the threat of sanctions, several American companies have continued to invest and work in Iran.

At the Ministerial trilateral meeting in Tehran, the countries hope to sign the project implementation agreement.

"The structure of the project, the framework agreement, the responsibility of each Government and the price formula will all be agreed on," he stated.

Asked about the pricing formula, the Minister said, under the formula being mooted by them there would be no ceiling on the price of gas to be supplied to India and Pakistan.

"We will not have any ceiling on the price and will consider regional and international prices prevailing at any point in time. Based on that we will prepare the price structure," he added. However, given the volatility of oil and gas prices, the formula would have conditions to review and compare with international and regional prices, the Minister said.

India is looking at the pipeline project to secure 60-90 million standard cubic metres per day (MSCMD), while Pakistan is seeking 30-50 MSCMD of gas supplies to bridge the expected shortfall in domestic production.

The gas sale and purchase agreement is to be worked out for 25-30 years.