8 September 2006 -- The Reuters news agency quoted a senior Iranian oil ministers as saying that India and Pakistan have two months to agree with Iran on a major natural gas pipeline or Tehran will earmark more of its reserves for liquefied natural gas (LNG) projects. Talks on the $7 billion gas pipeline from Iran -- home to the world's second-largest natural gas resources -- through Pakistan to fast-growing India have stumbled recently as Tehran has asked nearly twice the rate that New Delhi wants to pay.
India, Pakistan and Iran agreed last month to appoint an outside consultant to suggest a price for the gas. Iranian officials had offered a price linked to Dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu, the news agency said.
Work reportedly now is underway to change the pricing formula to one based on LNG import prices to Japan, the world's biggest consumer of the fuel, taking into account the cost of freight and transport.
India is trying to eliminate power shortages by securing new sources of energy for its booming economy. Iran is eager to tap into its mostly undeveloped gas resources. New Delhi is also weighing the cost of using cleaner fuel natural gas against more abundant but dirtier domestic coal, Reuters reported. It has already agreed a landmark civilian nuclear co-operation deal with the United States to boost its atomic power capacity.
India is also a potential buyer of Iran's LNG, but a preliminary supply deal agreed nearly two years ago stalled over the issue of price. The pipeline was first proposed more than a decade ago, but progress has been slow because of hostility between India and Pakistan and, more recently, growing US opposition to Iran.
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