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Tue 30 Aug 2005 04:00 AM

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India pushes for extra LNG

India is still negotiating extra supply of liquified natural gas (LNG) from both Iran and Qatar. A final decision from Iran may be delayed due the election of the new Iranian government, says an Indian official.

The Iranian government has yet to finalise the supply of 2.5 million tonnes of liquefied natural gas (LNG) to India. Talmiz Ahmad, additional secretary of the Indian external affairs ministry, told Oil&Gas Middle East that negotiations are still underway, with Iran and India yet to agree on a price.

India wants a total of 7.5 million tonnes yearly of LNG from Iran, but by June had managed to nail down only 5 million tonnes, with the remaining 2.5 million tonnes dependent on talks.

The election of the new government in Iran could further delay the deal, Ahmad said. He also said the Indian government could not rush the agreement, despite there being a need for the supply by 2011.

“We know that we need an extra 2.5 [million tonnes] by 2011, but we are not sure of the timeline of the present negotiations with Iran for the required supply,” he said.

Under the present agreement, Iran would start delivering the first 5 million tonnes of LNG to Dahej in Gujarat and Kochi in Kerala in the second half of 2009. Ahmad said India did not expect agreement on the additional 2.5 million tonnes to materialise immediately as the new Iranian government is bound to take a fresh look at India’s needs.

When asked about the proposed Iran-India oil & gas pipeline and the apprehensions that surround it, the official said all concerns were baseless. “A delegation from Iran visited India earlier last month to discuss the pipeline and an Indian group will also visit Iran in the last week of September to take the plan forward,” Ahmad said. The US has expressed its concerns about the plan.

India is also negotiating for more supplies from Qatar, from which it has been receiving LNG on a 25-year contract. Ahmad said there were a series of requirements India had of RasGas and that a decision on those could be made in October, when a delegation would visit Qatar.

There have been reports of an extra 1.25 million tonnes annually of LNG supply from Qatar, which could alleviate India’s urgent energy needs, which are set to grow. The world’s second most populous country produces only half the natural gas it uses and currently imports 70% of the crude it needs.

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