NEW DELHI, 8 January 2005 — India and Iran inked a 25-year agreement yesterday under which Tehran will supply liquefied natural gas (LNG) — touted as the fuel of the future — annually from 2009.
“Gas Authority of India Limited and Indian Oil Corp. have signed an agreement with National Iranian Gas Export Corp. yesterday to import 7.5 million tons of LNG for 25 years,” Petroleum Minister Mani Shankar Aiyar said.
The signing followed talks between Aiyar and his Iranian counterpart Bijan Namdar Zanghaneh.
“Iran and India have arrived at very, very important decision amongst themselves which relate to an agreement on the upstreams side, that is Indian participation in EMP projects, exploration and production in oil, combined with our purchasing LNG (Liquefied Natural Gas) from Iran, which has just now been concluded,” Aiyar said after the talks.
“The discussions had been going for about a year and half. They now stand concluded and we have identified a very large number of areas in oil, in gas, in regard to the refineries, in regard to petrochemical, in regard to Iranian investment in India,” Aiyar added.
Besides, ONGC Videsh Ltd. (OVL) will get a 20 percent share in the development of Iran’s biggest onshore oil field, Yadavaran, and 100 percent in 30,000 barrels per day Jufeyr field. The 20 percent in Yadavaran would translate into 60,000 barrels per day of crude oil for India, Aiyar said.
As per the pact on the LNG deal, IOC and GAIL will take delivery of the Iranian gas and GAIL will be the nodal agency for the sale of gas in India, GAIL Chairman and Managing Ddirector Proshanto Banerjee said.
The contract includes a clause for price review, he said.
“Considering the highly volatile nature of the crude prices, India has got a good deal (on LNG),” he said.
Aiyar and his Iranian counterpart Zanghaneh also discussed the proposed pipeline to transport Iranian natural gas, via Pakistan to India.
There were three options on the table - a pipeline that will supply gas to Pakistan for domestic use, separate pipelines for India and Pakistan or one that will supply gas to Pakistan for commercial use and deliver gas to India at the Pakistan-India border.
Tehran was in favor of the third proposal, he said.
Aiyar’s comments suggest that India may not participate in the proposed multi-billion dollar pipeline project but would be willing to buy the gas if it is delivered at its doorstep.
India will import 7.5 million tons of LNG from Iran and also has a market to absorb additional natural gas coming via the pipeline, Aiyar said.
“Our anticipated demand in 2025 for gas would be 400 million standard cubic meters per day. Our output today is less than 100 mscm per day. It is not possible to meet the incremental demand from domestic production and import of LNG and natural gas through pipeline was needed to meet the demands of the growing economy,” Aiyar said.
Regarding the pipeline, Aiyar said: “A delegation from Iran will visit India on the eve of Asian gas buyers summit commencing from Feb. 14, to initiate negotiations on a term sheet for the delivery of Iranian natural gas by pipeline at the India-Pakistan border.”