The deal has removed the main obstacle to the signing of a three-way agreement on building the 2,300 km Iran-Pakistan-India (IPI) pipeline with an estimated price tag of $7.5 billion. The first deliveries from gas-rich Iran are expected in 2011.
The price formula is based on the cost of natural gas in Japan, which has been accepted as the most suitable yardstick. Japan is one of the world's largest consumers of natural gas, and has a relatively stable energy market.
Hojatollah Ghanimifard, special representative of Iran's petroleum minister on the pipeline project, and the ministry's international affairs chief, was cited by the Indian paper as saying that under the model that has been worked out, "when the contract is signed, no set figure will be specified, and the price will be calculated according to the said formula."
Ghanimifard said the main obstacle is a deadlock between India and Pakistan on setting gas duties. He said the country's petroleum ministers had reached a decision that will resolve this issue.
India and Pakistan are under U.S. pressure not to do business with Iran in the energy sector. But the parties to the project have repeatedly stated their resolve to move forward with the key project, regardless of Washington's opposition.
