Monday, July 10 2006 16:37 Hrs (IST) - World Time -

New Delhi: Officials of India, Pakistan and Iran will meet in the first week of August to resolve the imbroglio over pricing of natural gas that Tehran wants to sell to the energy-hungry south Asian countries through a tri-nation pipeline.

"The last meeting of oil secretaries of the three countries in Islamabad on May 22-23 broke off after Iran sought a price linked to international crude oil for the natural gas it wants to sell to India and Pakistan through the over 7 billion dollar Iran-Pakistan-India pipeline," a Government source said.

The third meeting of the tripartite working group on the IPI gas pipeline project would be held here on August 3-4.

Iran had forwarded a gas pricing formula wherein the gas price is linked to Brent crude oil with a fixed escalating cost component (10 per cent of Brent crude oil). Tehran is seeking a price of 7.2 dollars per million Britsh thermal unit (mBtu), with a three per cent annual escalation.

"This price is more than 50 per cent the prevailing market determined gas price in India," the source said. New Delhi was not willing to pay anything more than 4.25 dollars per mBtu price of gas delivered at its border.

India wants to import 90 million standard cubic meters of gas per day from Iran through the 2,100 km-long pipeline while Pakistan has indicated a requirement of upto 60 mmscmd.

Besides the Brent linkage, the Iranian formula does not prescribe a floor and ceiling for the gas price, he said, "New Delhi was opposed to both linkage with Brent crude oil and absence of floor and ceiling." Incidentally, Pakistan has also rejected the formula.

The official-level talks would be followed by a meeting of energy ministers of the three countries in Tehran to finalise modalities for implementation of the project.