Indian GAIL in talks with Iran to revive LNG deal
State-run gas utility GAIL India Ltd has begun talks with Iran to revive a decade-old $22-billion LNG supply contract, the cheapest deal ever struck by an Indian firm.
Indian state firms had on June 13, 2005, signed a sale and purchase agreement (SPA) with National Iranian Gas Export Company (NIGEC) for buying 5 million tons (mt) a year of LNG on a long-term contract at very attractive price of $3.215 per million British thermal unit.
With prospects of sanctions against Iran being lifted after a nuclear accord it stuck with the US and other world powers, India has reopened dialogue on buying LNG from the Persian Gulf nation. “Dialogue has been initiated with Iranian counterparts to revive the LNG supply long-term SPA,” GAIL said in its latest annual report. In the contract, GAIL had signed to buy 2 million tons per annum (mtpa) of LNG from NIGEC while refiner Indian Oil Corp (IOC) had signed for 1.75 mt.
Bharat Petroleum Corp Ltd was to take another 1.25 mt.
“Iran has so far not responded to the offer,” a GAIL official said. “There is a half-finished LNG export terminal in Iran which will have to be completed before any export of LNG can begin from Iran.” The 2005 deal, he said, was an extremely attractive deal with price linked to Brent crude oil price with a floor of $10 per barrel and a ceiling of $31 a barrel.