Tehran and Islamabad have agreed on a revised price formula and a new price review mechanism for Iranian gas that will be piped to Pakistan,a senior Iranian official said on Wednesday. The new formula and review mechanism update terms reached in 2006 during the long-running negotiations on the project that are part of Irans effort to become a major gas exporter.
Iran,which sits on the world’s second biggest gas reserves,currently imports roughly about as much gas as it exports. US sanctions have been a factor hindering its export plans.
Hojjatollah Ghanimifard,the oil ministers special representative to the pipeline talks,said both sides agreed to amend terms because of changes in the energy market since 2006. He said agreement was reached after two days of talks in Tehran.
We agreed that the formula should be changed, he told Reuters,adding that the price review formula was also amended.
One of the changes (to the review formula)… was that a year before the commencement of delivery of the gas we are going to have a price review. Of course,this can be an option that either side can use, said Ghanimifard,who is also a senior official in the states National Iranian Oil Company. He said the changes have to be approved by the authorities in both countries,after which details would be announced. This could lead to setting a date for signing a contract,he added.
Almost five years after the contract is signed we hope that the commencement of gas delivery starts, he said.
India had been part of the $7 billion pipeline project,but stayed away from talks in September saying it wanted to agree transit costs through Pakistan on a bilateral basis first.