Committee formed to narrow down gas pricing margin

New Delhi, Aug 3 (UNI) The third secretary level meeting of the Iran-Pakistan-India Pipeline Project (IPI) today decided to form a committee to narrow down the price margin of the gas Iran proposes to sell to India and Pakistan.

The Committee on pricing will constitute of three members from each country and would place their recommendations on the final day of the meeting which is tomorrow, sources said.

The secretary level IPI Pipeline Project which began here today covered the various aspects of the project, including the issues of gas pricing, project structure and draft framework agreement.

Petroleum Secretary M S Srinivasan is leading the Indian delegation while Mr M H Nejad Hossenian, Iran Deputy Oil Minister of Petroleum and Mr Ahmad Waqar, Secretary, Ministry of Petroleum and Natural Resources of Pakistan are heading their respective delegations.

Heads of all the three delegations, in their opening remarks, emphasised on the need for resolving the various issues expeditiously for realising the project important for peace and prosperity of the region.

India and Pakistan had opposed Iran's demand for a higher price for gas it wants to export to the two countries through the seven billion dollar pipeline project.

Oil secretaries of the two countries, had an informal meeting last evening to devise a common strategy for the third round of tripartite talks on the pipeline. They opposed Iran's proposal, saying Tehran has to offer a price in line with international practices for long-term contract, the sources said.

The last round of talks between oil secretaries of the three nations in Islamabad on May 22-23 had broken down after Iran sought a price linked to international crude oil.

Iran had forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent Crude Oil). The formula translates into a price of 7.2 dollars per million British Thermal Unit (MBTU), with a three per cent annual escalation.

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

Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price. ''New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling,'' a government official said.

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