TEHRAN -- In a move which will kick start the process of sourcing LNG from Iran, the National Iran Oil Company (Iran’s leading oil and gas company) has invited Gail India Limited and Indian Oil Corporation (IOC) for jointly negotiating import of 2.5-million tones per annum (MTPA) of LNG from Iran, the Indian Express reported on its website on Tuesday.

Top government sources said that senior officials from Gail and IOC will discuss a sales purchase agreement (SPA) for import of Iranian LNG at a three-day meet from July 26 to 29 in Tehran. The SPA will be signed jointly by Gail India Limited and IOC with the National Iranian Gas Export Company (NIGEC), a fully-owned subsidiary of NIOC.

An important aspect of the deal is the recent directive of the petroleum ministry that LNG price at the customer’s door should not exceed $3 per mmbtu and the Iranian side should offer ‘most favored customer’ treatment to India. “Gail and IOC have been asked to incorporate these as clauses while finalizing the SPA for Iranian LNG”, sources said.

Sources disclosed that Iranian deputy minister for international affairs Hadi Nejad Hosseinian, in a letter to additional secretary, petroleum ministry, M.S. Srinivasan, has offered participating interest to the Indian oil companies in development of one discovered and one semi-discovered Iranian oil fields. In the first meeting of India-Iran joint working group on co-operation in hydrocarbon sector (held in Tehran in May this year), it was resolved that India will import 5 million tones per annum (mtpa) of LNG, to be taken in two phases of 2.5 mtpa for 25 years.

For the first phase, Gail has been nominated as the nodal agency by the petroleum ministry. In case a second LNG terminal comes up, IOC will be the lead operator with other oil companies as its partners.

“The joint working group (JWG) had agreed that exploration and production activities in developed and semi-developed fields in Iran and sourcing of LNG from Iran will have to be dealt as a package deal. Therefore, there will be parallel negotiations on sourcing LNG as well as equity participation by Indian oil companies in Iranian oil and gas fields”, sources said.

In addition to this, Gail India Limited and IOC officials will also hold discussions on other issues such as development of CNG infrastructure in Iran and for setting up petrochemical projects in Iran along with exploring other business opportunities in the downstream sector.

ONGC’s foreign arm, ONGC Videsh Ltd (OVL) would do the necessary groundwork in identifying and shortlisting Iranian oil fields under two categories (discovered and semi discovered) and then start discussions with NIGEC so that the terms including type of award could be negotiated and finalized, sources added.