Friday, June 10 2005 22:01 Hrs (IST) - World Time -

Tehran: India's Petroleum Minister Mani Shankar Aiyar will have a lot on his plate to discuss when he visits Iran this week to finalise purchase of liquefied natural gas (LNG) and discuss the ambitious Iran-Pakistan-India gas pipeline.

While India is keen on purchasing 2.5 million tonnes of additional LNG at a concessional rate, Iran is understood to be demanding a price, which is higher than what New Delhi has already agreed to pay for 5 million tonnes of LNG per annum it will source from Tehran.

"The Iranian side has proposed a hike in price. This despite Iranian Oil Minister Bijan Zanganeh committing to additional quantity at the same price (quoted for the 5 million tonnes LNG) in a meeting with Aiyar on January 7," Indian officials said.

India also wants the LNG composition to be as far as possible similar to that supplied to Qatar. "Since Qatar's LNG contains nearly 9.5 per cent C2/C3/C4 components, Iran should at least commit 5 per cent C2 as they are likely to extract most of C3 and C4," officials said.

Aiyar arrives in Tehran tomorrow to finalise the Sale Purchase Agreement (SPA) for the LNG deal.

"The price of additional gas had remained unresolved at the technical level discussions between the two sides last month to finalise the draft terms of LNG purchase," an official said.

On the 2,600-km Iran-Pakistan-India pipeline, Aiyar is likely to suggest the participation of Indian Oil Corporation and GAIL (India) in construction of the pipeline in the Iranian portion.

He will also brief the Iranian side about the discussions he held in Pakistan just ahead of his visit here on the pipeline issue.

India and Pakistan this week formed a joint committee to work out modalities and thrash out technical, financial and legal issues for commencing work on the $4.16-billion project by early 2006.

He will take up with Zanganeh the possibility of Iran increasing its contracted LNG supply from 5 million tonnes to 7.5 million tonnes per annum.

Also to figure during discussions would be Indian firms picking up stake in Iranian oil field development in lieu of buying LNG.

ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corp (ONGC), was to get 20 per cent interest equivalent to 60,000 barrels per day, in Yadavaran field and 100 per cent rights in the Jufeyr field for purchase of an additional 2.5 million tonnes.

"While we have progressed well on LNG deal, Iran is yet to assign the equity in Yadavaran or Jufery fields. Aiyar will take up this issue with his counterpart when he meets him on one-to-one basis tomorrow," the official said.

During Aiyar's three-day visit to Tehran, the India-Iran Joint Working Group on Hydrocarbons will also meet, where the pitch by OVL and Indian Oil Corporation for one block each in the gigantic South Pars gas field for development and production of LNG would be taken up.

Also on agenda is Indian firms taking up refinery upgradation and expansion jobs and IOC's proposal to participate in an upcoming petrochemical complex.