Regional LNG: Iran offers 5 million tons LNG at $2.22/ MBTU: Report

Iran on Monday offered to sell LNG to India at $2.22 per million British thermal unit (MBTU) and offered 20 per cent stake in a discovered oil field to compensate for the difference between LNG price and the domestic gas price of $1.58 per MBTU, Bombay-based Indian Express Newspapers reported.

The price offered by Iran is cheaper than India?s first LNG imports from Qatar. Rasgas of Qatar is selling Petronet LNG Ltd (PLL) 5 million ton per annum of LNG at a free-on-board (FOB) price of $2.53 per MBTU.

The Iranian FOB price was, however, higher than the $1.72 per MBTU price quoted by the Indian officials at the second meeting of the India-Iran joint working group (JWG) on co-operation in hydrocarbon sector that began on Monday.

Sources said a agreement on the price of LNG India plans to import from Iran, provided its high price is cross-subsidised through a return from a producing oil field, could not be reached today and discussions will continue on Tuesday.

Iran offered equity in Huseinieh-Khush oil field and proposed to pay ONGC Videsh 15 percent return on investment in developing the field.

The 20 percent equity offered in the oil field was equivalent to 60,000 barrels per day, a senior official said.

The Indian side at the JWG was led by MS Srinivasan, additional secretary, petroleum ministry, while the Iranian delegation was headed by deputy oil minister MH Nejad Hosseinian. Sources indicated that supply of LNG, its sale purchase agreement and the price may be finalised on Tuuesday.

Qatar gas is shipped to India at 26 cents per MBTU and regassified at 58 cents per MBTU. After adding taxes and local levies, pipeline transportation cost and margins, the delivered cost of PLL?s regassified-LNG in Gujarat is $4.87 per MBTU and outside Gujarat at $4.93 per MBTU.

Sources said Iranian LNG may be regassified at PLL?s Dahej terminal, which is being expanded to 10 million tons. Being an expansion project, regassification cost for Iranian LNG would be lower than Qatar gas; besides charter hire rates for LNG tankers have also come down since PLL hired ships for transporting LNG from Qatar to Gujarat.

The domestic natural gas lands up with the customer at $2.94 per MBTU after royalty, transportation charges and sales tax.

Reliance has priced the deepsea gas in Krishna Godavari basin at $2.70 per MBTU (landfall price). (*)