News Release Details
India, Pak, Iran agree on gas price formula
New Delhi 16-Jul-2007
India, Pakistan and Iran have agreed on a "price formula" that will govern the cost of gas through the IPI gas pipeline based on the price. The special representative of the Iranian minister of petroleum on IPI and director of international affairs in the petroleum ministry, Hojatollah Ghanimifard, said in remarks made available to this newspaper that a model had been worked out so that "when the contract is signed, no set figure would be mentioned and the price will be calculated according to the said formula. For example, if gas is. To be transferred four yeas, later, at that time, we would introduce the price of Japan's imported crude oil, not when the contract is signed." He said that the agreement on the inclusion of a price line in the contract has been a major achievement in the last round of trilateral negotiations. The main hitch, according to Mr Ghanimifard, is the inability of India and Pakistan to reach a final conclusion on gas duties. He said a decision had been taken to resolve this at the petroleum ministers' level, with indications that Mr Murli Deora will now visit Islamabad to finalise the details. This will be a crucial meeting and was expected to be held this month although no dates have been fixed as yet, particularly as a bilateral agreement on gas duties between New Delhi and Islamabad is essential for the trilateral contract to be finalized. The three countries, according to the Iranian official, have taken a decision to sign only one trilateral contract which Iran is reportedly ready to present as soon as India and Pakistan clear the main hurdle on gas duties. According to him, both the Indian and Pakistan delegations had indicated at a meeting which had been attended by petroleum minister Murli Deora that negotiations with Pakistan should end in July. India wants to pay duty for only part of the gas pipeline on Pakistan's territory as the latter is using the gas as well. Pakistan has raised objections to this, and the deadlock, according to participants, can be broken only at the ministerial level. The three governments have resolved most of the initially-identified 16 points of difference and, according to Mr Ghanimifard, only "five to six controversial paragraphs remain to be discussed." Apart from the gas duties, the delivery point also has been decided along the border with Pakistan. "Of course the delivery point has not been decided technically, but the distance over which the pipeline should travel from Iranshahr to Pakistan has been determined and it will not take long to finalise that route," the senior Iranian official clarified. Agreement has also been reached on the companies that should sign the contract. Mr Ghanimifard said: "After the final result of the negotiations between India and Pakistan for determining gas duties and the name of the Pakistani and Indian companies are announced, we will announce the name of the Iranian companies that will sign the contract." He made it clear that the contract for building the IPI gas pipeline will be concluded according to the price formula and no set price will be introduced. This will be determined only at the time that the gas is transferred to the pipeline. He added that he would have disclosed the details of the price formula had it not been for the fact that India and Pakistan did not want to disclose it at this stage. Iran is visibly enthusiastic about the sudden progress on the long-stalled pipeline, with an invitation already having been extended to Prime Minister Manmohan Singh and Pakistan President Gen. Pervez Musharraf to visit Tehran for signing the contract. New Delhi and Islamabad are tightlipped, and while reporting progress have not been forthcoming with the details as both countries are under US pressure not to do business with Iran in the energy sector. However, as experts here pointed out, if India is serious about its commitment to energy security, it cannot do so without mopping up resources from all available quarters.
New Delhi 16-Jul-2007
India, Pakistan and Iran have agreed on a "price formula" that will govern the cost of gas through the IPI gas pipeline based on the price. The special representative of the Iranian minister of petroleum on IPI and director of international affairs in the petroleum ministry, Hojatollah Ghanimifard, said in remarks made available to this newspaper that a model had been worked out so that "when the contract is signed, no set figure would be mentioned and the price will be calculated according to the said formula. For example, if gas is. To be transferred four yeas, later, at that time, we would introduce the price of Japan's imported crude oil, not when the contract is signed." He said that the agreement on the inclusion of a price line in the contract has been a major achievement in the last round of trilateral negotiations. The main hitch, according to Mr Ghanimifard, is the inability of India and Pakistan to reach a final conclusion on gas duties. He said a decision had been taken to resolve this at the petroleum ministers' level, with indications that Mr Murli Deora will now visit Islamabad to finalise the details. This will be a crucial meeting and was expected to be held this month although no dates have been fixed as yet, particularly as a bilateral agreement on gas duties between New Delhi and Islamabad is essential for the trilateral contract to be finalized. The three countries, according to the Iranian official, have taken a decision to sign only one trilateral contract which Iran is reportedly ready to present as soon as India and Pakistan clear the main hurdle on gas duties. According to him, both the Indian and Pakistan delegations had indicated at a meeting which had been attended by petroleum minister Murli Deora that negotiations with Pakistan should end in July. India wants to pay duty for only part of the gas pipeline on Pakistan's territory as the latter is using the gas as well. Pakistan has raised objections to this, and the deadlock, according to participants, can be broken only at the ministerial level. The three governments have resolved most of the initially-identified 16 points of difference and, according to Mr Ghanimifard, only "five to six controversial paragraphs remain to be discussed." Apart from the gas duties, the delivery point also has been decided along the border with Pakistan. "Of course the delivery point has not been decided technically, but the distance over which the pipeline should travel from Iranshahr to Pakistan has been determined and it will not take long to finalise that route," the senior Iranian official clarified. Agreement has also been reached on the companies that should sign the contract. Mr Ghanimifard said: "After the final result of the negotiations between India and Pakistan for determining gas duties and the name of the Pakistani and Indian companies are announced, we will announce the name of the Iranian companies that will sign the contract." He made it clear that the contract for building the IPI gas pipeline will be concluded according to the price formula and no set price will be introduced. This will be determined only at the time that the gas is transferred to the pipeline. He added that he would have disclosed the details of the price formula had it not been for the fact that India and Pakistan did not want to disclose it at this stage. Iran is visibly enthusiastic about the sudden progress on the long-stalled pipeline, with an invitation already having been extended to Prime Minister Manmohan Singh and Pakistan President Gen. Pervez Musharraf to visit Tehran for signing the contract. New Delhi and Islamabad are tightlipped, and while reporting progress have not been forthcoming with the details as both countries are under US pressure not to do business with Iran in the energy sector. However, as experts here pointed out, if India is serious about its commitment to energy security, it cannot do so without mopping up resources from all available quarters.