Gas pipeline project with Iran hits roadblock

New Delhi, July 17 (UNI) The much-touted 7-billion dollar Iran-Pakistan-India (IPI) gas pipeline project scheduled to deliver the fuel to South Asian countries including India has hit a roadblock with Iran rejecting the price set by India.

The news agency PIN of the Iranian Oil Ministry, quoted Iran Oil Minister Kazem Vaziri-Hamaneh who termed the Indian offer as based on ''subsidised domestic prices''.

He said Teheran will not sell its gas at the proposed price.

Iran is asking for at least 7.2 dollars per mmbtu while New Delhi has quoted a price of 4.2 dollars per mmbtu for the gas delivered at its border. Tehran's price is also subject to a three per cent annual escalation.

The statement comes in close to the Teheran meet, where oil secretaries of the three countries--Iran, Pakistan and Iran will meet in August 3-4, next month. The Secretary level talks would be followed by a meeting of energy ministers of the three countries in Tehran to finalise modalities for implementation of the project.

''If the Indian side is not ready to buy our gas at its real price, we have no obligation to sell it at the price lower than the real one,'' Mr Vaziri-Hemaneh was quoted in the PIN.

The main agenda of the Oil secretaries meet at Teheran is to resolve the impasse over pricing of natural gas that Teheran wants to sell to India and south Asian countries.

The last meeting of oil secretaries of the three countries in Islamabad on May 22 and 23 broke off after Iran sought a price linked to international crude oil for the natural gas it wants to sell to India and Pakistan.

Iran's gas pricing formula is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent crude oil).

The price is more than 50 per cent above the prevailing market- determined gas price in India, according to Indian officials.

India wants to import 90 million standard cubic meters of gas per day (mmscmd) from Iran through the 2,100 km-long pipeline while Pakistan has indicated a requirement of up to 60 mmscmd.

Apart from the Brent linkage, the Iranian formula does not prescribe a ceiling for the gas price. New Delhi is opposed to this formula and even Pakistan is understood to have rejected it.

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