GAIL starts negotiation to revive a $22bn LNG purchase deal with Iran

State-owned Gas Authority of India (GAIL) has started negotiating with Iran to revive a $22bn liquefied natural gas (LNG) supply contract which was signed on 13 June 2005.

The sale and purchase agreement (SPA) between the National Iranian Gas Export (NIGEC) and Indian state companies, which was aimed at buying five million tonnes of LNG a year, had not been carried out.

The 2005 deal was not carried out since it involved a provision for it to be approved by National Iranian Oil Company (NIOC) within 15 days, which was neither secured nor implemented. The LNG SPA still remains enforceable.

The deal had fixed the price of LNG at $3.215 per million British thermal unit, reports the Press Trust of India.

Talks between the countries regarding the deal have restarted following Iran’s recent agreement with the US and world powers which allows access to nuclear sites in the country in exchange for easing previously imposed energy sanctions.

GAIL said: "Dialogue has been initiated with Iranian counterparts to revive the LNG supply long-term SPA"

The deal included provision for GAIL purchasing two million tonnes per annum of LNG from NIGEC. It also entitled refiner Indian Oil (IOC) to 1.75 million tonnes and Bharat Petroleum (BPCL) to another 1.25 million tonnes of LNG.

A GAIL official was quoted by the news agency as saying: "Iran has so far not responded to the offer.

"There is a half-finished LNG export terminal in Iran which will have to be completed before any export of LNG can begin from Iran."