Himalayan News Service

New Delhi, January 7:

India will buy five million tonnes of liquefied natural gas (LNG) from Iran annually under a 25-year deal finalised here today. The two countries also appeared to reach an agreement on supply of gas by a pipeline through Pakistan.

An ‘in principle’ agreement on the supply of LNG beginning 2007-08 was reached during talks between Petroleum and Natural Gas Minister Mani Shankar Aiyar and his Iranian counterpart Bijan Nzangeneh here. “All details have been settled,” Aiyar said. He also said that in a separate development an Iranian delegation would visit India on the eve of the Asian Gas Summit here on February 14 to hold talks on delivery of Iranian gas by a pipeline at the India-Pakistan border. The minister’s comments mean 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.

“We have brought the process of negotiations that began in January 2003 to a settlement. All details have been settled,” Aiyar said. He said India would pump in 20 per cent of the development cost of the Yadavaran field in Iran. The minister added that India’s gas requirements are expected to increase four-fold by 2020. “Today our output is less than 100 million standard cubic metres and the demand is expected to reach 400 million. Despite new discoveries in India, we will be in need of substantial quantities of gas,” he said. According to the agreement on the LNG deal, Indian Oil Company and GAIL will take delivery of the Iranian gas and GAIL will be the nodal agency for the sale of gas in India, GAIL chief managing director Proshonto Banerjee said. The contract includes a clause for price review, he said.

“Considering the highly volatile nature of the crude, India has got a good deal on LNG,” he said. He said the delivery of the gas would be taken at locations to be decided - the LNG terminal extension in Dahej (Gujarat), the Petronet LNG terminal coming up in Kochi, the Dabhol terminal that may be revived or the one at Ennore in Tamil Nadu.