New Delhi, Dec 7: A favourable deal with China has put Iran on a strong wicket in its LNG negotiations with India.

Sources said China has agreed to buy annually 3 million tonnes (mt) of LNG for 25 years at a price of around $5 per million British thermal unit (mBtu), vastly superior to India's price of $2.9 mBtu in the agreement signed in June 2005 that got scuppered when Iran said it was not possible to abide by the arrangement in the absence of an approval from the Iranian parliament. The price was fixed on the basis of a crude price of $31 per barrel.

With oil prices shooting up, Iran demanded a value proportionate to the crude price of $65, only to be rebuffed by India as it was not possible for GAIL, the buyer of the LNG in India, to sell gas at such a high price.

India was expecting a better deal, thinking that the boycott of Iranian gas by the West has reduced the country’s bargaining strength in oil.

The situation changed with China emerging as a buyer. A source said it would be difficult to get a price lower than China since Beijing commands greater clout in Teheran because of the support extended to Iran in the nuclear stand-off with the West.

India had pushed Iran to the corner, by insisting on the validity of the 2005 sales purchase agreement signed by Iran.

It is reliably learnt that the new price is over $4 per mBtu, benchmarked to a crude price of around $55 per barrel.

The higher price is realistic as it is on a par with the price Reliance and other private companies are charging for the natural gas. In contrast, ONGC is getting a mere $2.3 per mbtu for its natural gas.