India not to drag Iran to court on LNG deal

NEW DELHI: India is unlikely to take Iran to court for walking out of the 22-billion dollar LNG deal but wants Tehran to take responsibility of not being able to execute the project, a top official said.
 
Iran had last year signed a contract to supply to India 5 million tonnes per annum of liquefied natural gas for 25 years. Tehran now wants to renegotiate the price even though it has failed to keep up with the agreed schedule on awarding contracts for developing the South Pars gas field and tender for a plant to liquefy the gas so as to keep the date with the delivery schedule beginning end-2009.

"The June 2005 deal was concluded and signed. We have a legally binding contract which provides for strict penalties in case of default. But we will not press for international arbitration against a friendly nation if it gives us actual reasons for its actions," the official said.

He said Iran was possibly facing difficulties in sourcing technology to liquefy gas, a domain of US and European firms who may not be inclined to give it to a regime which faces possible UN sanctions over its nuclear program.

Iran is exploiting a clause in the deal that said the agreement was subject to ratification by the Supreme Economic Council of the Iranian government. But India argues that the official ratification process is a formality that cannot be used as a pretext for revisiting a concluded transaction.