India agrees to Iran demand to renegotiate LNG price

New Delhi -- India Friday agreed to renegotiate the price of LNG (liquefied natural gas) with Iran, which is seeking a higher price for the five million tonnes annual supply deal.

"Indian and Iran will be renegotiating the LNG price," Petroleum Minister Murli Deora said here Friday after a meeting with an Iranian delegation led by Iran Foreign Minister Manochehr Mottaki.

He admitted that India required more gas supplies, primarily to meet the requirement of the power and fertiliser sectors, and said the high global gas prices had necessitated India's decision to agree to renegotiate. Deora said India had almost lost hope of the contract for the supply of five million tonnes for 25 years coming through.

While India has so far been maintaining that the deal, clinched in June 2005 in Tehran for LNG supply from 2009, is final and binding, Iran has taken the stand that the contract needed to be ratified by higher authorities.

"We are hopeful that the contract will now fructify," Deora said.

"Iran has given a specific formula on the basis of which we will see how we can move further. There is some understanding between us of the need to renegotiate. Iran has given us time."

India, which is striving to clinch more long-term LNG deals on the lines of the agreement with Qatar, is keen to see that it doesn't have to pay too much for the LNG it is scouting for, while Iran doesn't want to lose out through a low price deal.

"We have had useful negotiations. We see the need for the negotiations with a specific formula for finalising the issue," said Motakki.

The Iranian minister stressed that Iran needs to export LNG and use the income for its developmental projects.

He was happy that there was "political will on both sides" to finalise the LNG deal as also the multi-billion dollar tri-nation Iran-Pakistan-India gas pipeline project.

Both the ministers said the final report of the consultants on the pipeline is expected soon and a secretary level trilateral meeting would be held in Tehran next month.