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Iran, India sign 22-billion-dollar LNG deal

http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=32501&NewsKind=Current%20Affairs

Tuesday, June 14, 2005 - ©2005 IranMania.com

LONDON, June 14 (IranMania) - Iran and India on Monday signed a deal worth $22 bln for Tehran to supply five million tonnes of liquefied natural gas (LNG) annually over a 25-year period from 2009.

"We managed to agree on a price for the LNG. The exports should begin in 2009 and rapidly reach a level of five million tonnes annually," Iranian Oil Minister Bijan Namdar Zanghaneh said following talks with his Indian counterpart Mani Shankar Aiyar.

The contract was signed between the National Iranian Gas Export Company and three Indian firms -- Indian Oil Company (IOC), Gail, and Baharat India -- and came after three days of negotiations between the ministers.

Zanganeh also announced that discussions would continue between the two countries over awarding India exploitation rights in the onshore Jofeir oilfield and 10 percent of the field at Yadavaran in Khuzestan province of southwest Iran.

"If India accepts increasing the exports of LNG by 2.5 million additional tonnes, its share in Yadavaran will increase to 20 percent," he added.

The two counties have yet to agree on the price of the extra 2.5 million tonnes of LNG.

Meanwhile, India and Iran signed a memorandum of cooperation over building a gas pipeline between Iran and India via Pakistan.

The document sets the framework for discussions on the amount of gas to be transported and on when the more than four-billion-dollar project to build the 2,600-kilometre (1,600-mile) link would start.

An announcement on the pipeline will be made around the end of the month, an Iranian official said Monday on the sidelines of an oil and gas conference in Kuala Lumpur.

"We will make an announcement in two weeks," Reza Amrollahi, Iran's senior deputy energy minister, told reporters.

Pakistan, meanwhile, said it was to hold talks with Iran on the pipeline next week.

Negotiations over the pipeline -- which would will supply gas from the massive South Pars offshore fields in the Gulf -- began in 1994 but made little headway because of tensions between Pakistan and India, which have fought three wars since gaining independence in 1947 from Britain.

However, since January 2004, the two energy-starved countries have been engaged in a peace process and relations are at their best for years.

Aside from relations between the two neighbours, there are other obstacles: its high cost and necessary transit through the unsettled Pakistani province of Baluchistan where gas pipelines have been sabotaged by tribes.

The United States, an increasingly close ally of India and leading critic of Iran, has also made clear its objections to New Delhi buying gas from a country it accuses of supporting terrorism and attempting to make a nuclear bomb.