India threatens to pull out of Iran gas pipeline project
Pakistan Times Foreign Desk Report

NEW DELHI (India): India on Wednesday threatened to pull out of the proposed $4.16b Iran-India pipeline project over price of natural gas saying Tehran has to price the fuel at rates affordable to industry in India, reported Doordarshan and Zee News.

“We will not buy gas from Iran if we cannot sell it in India... If they say they have alternate markets in US, China and Japan, (who are willing to pay higher price) then I might as well ask them to tap them,” Indian Petroleum Minister Mani Shankar Aiyar said at a book release function in New Delhi.

Iran wants a price equivalent to that of liquefied natural gas (LNG) for the natural gas it plans to sell to India by the pipeline, which would pass through Pakistan.

“In our country, paying capacity of (key consumers) power and fertiliser sector was kept in mind for pricing of the feedstock (gas). We can buy the energy, provided we can afford the price,” he said.

Cost of LNG

LNG is twice as costly as domestically produced natural gas. Aiyar said India and Pakistan together needed some 200 million standard cubic meters per day of Iranian gas and Tehran had to offer special price to such large consumers.

Power and fertiliser industries in India are not willing to pay a doorstep price of more than three dollars per million British thermal units. In comparison, Iran demands a price equivalent to the price of LNG, which comes to about 4 dollars per million BTUs.

Adding transportation and transit charges (to be paid to Pakistan for the length of pipeline that would pass through its territory), the final price would be over 4.50 dollars per million BTUs.●