Iran offers to sell LNG to India

Jun 29, 2004 02:00 AM

Iran offered to sell LNG to India at $ 2.22 per mm Btu and offered 20 % stake in a discovered oil field to compensate for the difference between LNG price and the domestic gas price of $ 1.58 per mm Btu.
The price offered by Iran is cheaper than India’s first LNG imports from Qatar. RasGas of Qatar is selling Petronet LNG Ltd 5 mm tpy of LNG at a free-on-board (FOB) price of $ 2.53 per mm Btu. The Iranian FOB price was, however, higher than the $ 1.72 per mm Btu price quoted by the Indian officials at the second meeting of the India-Iran joint working group on co-operation in hydrocarbon sector.

Sources said an agreement on the price of LNG India plans to import from Iran, provided its high price is cross-subsidised through a return from a producing oil field. Iran offered equity in Huseinieh-Khush oil field and proposed to pay ONGC Videsh 15 % return on investment in developing the field. The 20 % equity offered in the oil field was equivalent to 60,000 bpd, a senior official said.
The Indian side at the JWG was led by M.S. Srinivasan, additional secretary, petroleum ministry, while the Iranian delegation was headed by deputy oil minister M.H. Nejad Hosseinian. Sources indicated that supply of LNG, its sale purchase agreement and the price may be finalised soon.

Qatar gas is shipped to India at 26 cents per mm Btu and regasified at 58 cents per mm Btu. After adding taxes and local levies, pipeline transportation cost and margins, the delivered cost of PLL’s-LNG in Gujarat is $ 4.87 per mm Btu and outside Gujarat at $ 4.93 per mm Btu.
Sources said Iranian LNG may be regasified at PLL’s Dahej terminal, which is being expanded to 10 mm tons. Being an expansion project, regasification cost for Iranian LNG would be lower than Qatar gas; besides charter hire rates for LNG tankers have also come down since PLL hired ships for transporting LNG from Qatar to Gujarat.

The domestic natural gas lands up with the customer at $ 2.94 per mm Btu after royalty, transportation charges and sales tax.
Reliance has priced the deep-sea gas in Krishna Godavari basin at $ 2.70 per mm Btu (landfall price).

Source: Indian Express Newspapers
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