Friday, January 14 2005 16:46 Hrs (IST) - World Time -

New Delhi: India's $ 40 billion deal with Iran for import of 7.5 million tonnes of LNG for 25 years beginning 2009 is more expensive than liquefied natural gas Petronas of Malaysia had offered to sell to New Delhi last year.

The delivered cost of Iran LNG would not be less than $ 3.40 per million British thermal unit (mBtu) as compared to Petronas' offer to state-run National Thermal Power Corp to sell three million tonnes per annum of LNG at a delivered price of $ 3.27 per mBtu, industry sources said.

India will pay Iran 0.065 of Brent price at the time of loading of each consignment plus the fixed price of $ 1.2 per mBtu. Price according to this formula would be capped at $ 3.10 per mBtu at $ 31 a barrel Brent price.

To this $ 0.30 per mBtu would be added for transporting the gas in its liquefied form in specialised tankers from Phase 12 of the South Pars gas field to India.

"In comparison, Petronas had offered lesser volumes at a lower price," a source said. Petronas had quoted a delivered price of $ 3.63 per mBtu on net heating value basis. In gross heating value terms, the criteria for Iran LNG, the price came to $ 3.27 per mBtu.

While Iran's LNG's fixed price component ($ 1.2 per mBtu) would have an escalation of two percent per year after the second year of the contract delivery, Petronas price had an escalation rate of 15 percent of US Consumer Price Index. US-CPI hovers around two percent.