06-14-2005, 04:48 AM
<b>India in $20bn LNG supply pact with Iran</b> <!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo-->
<b>TEHRAN: The game wrapped up. After engaging in diplomatic mind-games with Tehran for months, New Delhi has finally sewed up long-term LNG supplies of 5m tonne per annum.
India and Iran today signed the final sales purchase agreement valued at $20bn for LNG supplies, the first consignment of which is expected to reach Indian shores by â09. This is one of the largest overseas commercial deals signed by India. The contract price is estimated at $3.51 per mmbtu.</b>
The contracted gas will be primarily used by the northern and western Indian markets to fuel power plants and manufacture fertiliser. Some quantities of this gas will also be used as non-polluting fuel for motor vehicles.
<b><span style='font-size:14pt;line-height:100%'>The 25-year supply contract is tied up with the oil exploration interests of Indian oil companies, often referred to as oil-for-gas deal. India has been assured a 10% stake in the Yadavaran oilfield and a 100% stake in the Juffair field, in return for lifting assured gas supplies from Iran. </span></b>
India has also managed to build in a âpure supply dealâ with Iran. This means that both Iran and India be liable to pay penalties either if Iran does not ensure timely supplies or India fails to lift committed quantities of gas. The two sides have also agreed to set up a joint monitoring committee to track investment commitments.
The defaulting party will have to pay a penalty for its failure to meet deadlines. This clause is of immense importance as the supplier is under obligation to make timely deliveries of the committed quantity. The Iran LNG contract, India's second after a similar deal with Qatar, has had its share of hurdles.
For one, India has had to settle for only a 10% stake in the Yadavaran field, Iran's largest onshore gasfield. China, the operator, has a significant stake in the field. Officials say Iran declined more than a 10% stake in this field as it probably wants to accommodate another multinational company in the venture.
Right now, Iran is making an all-out effort to woo foreign investments â both from Asia and the west â to muscle up diplomatic power against US threats. India's efforts to seal the entire deal for 7.5m tonne with additional stake in the exploration business will have to wait for some time.
Iran is unwilling to commit or take long-term contracts at this point with elections due later this week. Also, the Iranians are demanding a higher price for additional quantities of LNG.
<b>The contracted price of $3.51 per mmbtu includes a fixed component of $1.2 per mmbtu and a variable component of about .065 points linked to the Brent. The Brent price has been capped at $31 a barrel. The price of gas at the Iran border works out to around $3.21, to be delivered at $3.51 per mmbtu after taking shipping costs into account.</b>
The signing of the pact with Iran brings to an end Indian oil minister Mani Shankar Aiyar's 10-day central Asian campaign in search of new supply sources for his energy-starved nation. It also pitches India as a significant player in the âGreat Gameâ of global oil and power.
Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
<b>TEHRAN: The game wrapped up. After engaging in diplomatic mind-games with Tehran for months, New Delhi has finally sewed up long-term LNG supplies of 5m tonne per annum.
India and Iran today signed the final sales purchase agreement valued at $20bn for LNG supplies, the first consignment of which is expected to reach Indian shores by â09. This is one of the largest overseas commercial deals signed by India. The contract price is estimated at $3.51 per mmbtu.</b>
The contracted gas will be primarily used by the northern and western Indian markets to fuel power plants and manufacture fertiliser. Some quantities of this gas will also be used as non-polluting fuel for motor vehicles.
<b><span style='font-size:14pt;line-height:100%'>The 25-year supply contract is tied up with the oil exploration interests of Indian oil companies, often referred to as oil-for-gas deal. India has been assured a 10% stake in the Yadavaran oilfield and a 100% stake in the Juffair field, in return for lifting assured gas supplies from Iran. </span></b>
India has also managed to build in a âpure supply dealâ with Iran. This means that both Iran and India be liable to pay penalties either if Iran does not ensure timely supplies or India fails to lift committed quantities of gas. The two sides have also agreed to set up a joint monitoring committee to track investment commitments.
The defaulting party will have to pay a penalty for its failure to meet deadlines. This clause is of immense importance as the supplier is under obligation to make timely deliveries of the committed quantity. The Iran LNG contract, India's second after a similar deal with Qatar, has had its share of hurdles.
For one, India has had to settle for only a 10% stake in the Yadavaran field, Iran's largest onshore gasfield. China, the operator, has a significant stake in the field. Officials say Iran declined more than a 10% stake in this field as it probably wants to accommodate another multinational company in the venture.
Right now, Iran is making an all-out effort to woo foreign investments â both from Asia and the west â to muscle up diplomatic power against US threats. India's efforts to seal the entire deal for 7.5m tonne with additional stake in the exploration business will have to wait for some time.
Iran is unwilling to commit or take long-term contracts at this point with elections due later this week. Also, the Iranians are demanding a higher price for additional quantities of LNG.
<b>The contracted price of $3.51 per mmbtu includes a fixed component of $1.2 per mmbtu and a variable component of about .065 points linked to the Brent. The Brent price has been capped at $31 a barrel. The price of gas at the Iran border works out to around $3.21, to be delivered at $3.51 per mmbtu after taking shipping costs into account.</b>
The signing of the pact with Iran brings to an end Indian oil minister Mani Shankar Aiyar's 10-day central Asian campaign in search of new supply sources for his energy-starved nation. It also pitches India as a significant player in the âGreat Gameâ of global oil and power.
Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->