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Our Bureau

Nine-member technical team to submit report today

New Delhi , Aug. 3

Pricing continues to remain a thorny issue on the proposed multi-billion dollar gas pipeline project from Iran to India via Pakistan. The three countries agree that a huge difference in the gas price between buyers (India and Pakistan) and seller (Iran) exists. In order to reach an early solution to the pricing issue, the three parties have decided to set up a nine-member technical group, which would submit its report on Friday.

"We have agreed to set up a group of nine members, three members each from the countries involved to discuss the price issue tonight and come out with recommendation tomorrow morning," the Petroleum Secretary, Mr M.S. Srinivasan, told newspersons at the end of the day one of the two-day trilateral talks on the project. While India and Pakistan are willing to buy gas at $4.2 per million British thermal units (mBtu), Iran has linked the gas prices to a 15-day average of Brent crude.

Prices quoted

The Petroleum Secretary said the three countries need to be flexible on the pricing issue. Iran wants to sell gas at 10 per cent price of Brent crude plus a fixed component of $1.2 per mBtu at Pakistan-Iran border. Assuming an average Brent of 70 per cent, the cost of gas at Pakistan-Iran border is working out to be $8.2 per mBtu. But this is far higher than the $4.25-per mBtu offered by India at the border with Pakistan. India's gas price offer of $4.25 per mBtu is inclusive of the transit fee, to be paid to Pakistan.

Mr Srinivasan conceded that the difference between the prices quoted by Iran and India was 60 per cent. ``Differences have narrowed down in the sense that all sides have agreed to discuss in detail the issue at an expert committee level,'' he added.

Despite the differences, India and Pakistan are continuing with the dialogue process as the Iranian gas is seen as critical for energy security. India wants to import 90 million standard cubic metres (mmscmd) of gas per day from Iran through the 2,100-km pipeline, while Pakistan has indicated a requirement of up to 60 mmscmd.

Deciding factor

Pakistan is also maintaining similar stance on the gas pricing issue as India. Earlier, speaking to newspersons, Mr Mukhtar Ahmed, Energy Advisor to Pakistan's Prime Minister, said Pakistan considered affordability as the deciding factor for importing gas from Iran. "We are not asking for any concessionary price but for a price that is economically viable and makes sense for both the buyers and the seller," he said.

On whether Pakistan would decide to proceed on its own in case India drops out of the project due to gas price issue, he said, "Our position regarding price is the same whether we go bilateral or trilateral."

The Iranian Deputy Minister of Petroleum for International Affairs, Mr M.H. Nejad Hossenian, said the price being offered by India and Pakistan for Iranian gas was half of what Tehran was looking for. "The seller's price is about twice of what the buyer is offering. The price we are asking is fair and just. We have a report saying that it is a good price for India and Pakistan," he maintained.

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