LNG deal with India is off: Iran --- THIS IS BOTH GOOD & BAD NEWS

The Hindu:

Iran has informed India that the five-million-tonne a year Liquefied Natural Gas (LNG) export deal, with deliveries scheduled to begin in 2009 for a 25-year period, is off. This was conveyed to Indian officials in Vienna soon after the anti-Iran vote cast on Saturday by New Delhi in the International Atomic Energy Agency (IAEA) governing board.

In a communication to the Prime Minister's Office and South Block dated September 24, India's Permanent Representative in Vienna, Sheelkant Sharma, wrote that his Iranian counterpart had told him the LNG deal, signed between the two sides in June, was off.

The Iranian Ambassador in Vienna came up to Dr. Sharma after India's vote and conveyed a message from Ali Larijani, Iran's top nuclear negotiator, that Teheran was no longer willing to go ahead with the $21-billion deal.

With this, India's energy security has suffered a major blow. The June agreement was considered a good deal for India; in the variable component of the price formula the Brent price of crude was capped at $31 a barrel.

In September, during External Affairs Minister Natwar Singh's visit to Iran, India was told that the deal was through and that permission from the National Iranian Oil Company board would be forthcoming.

The External Affairs Ministry spokesman told presspersons on September 3 that Iran was considering an additional 2.5 million tonnes of LNG a year being sought by India. On September 2, Mr. Larijani said in Teheran: "The issue of exporting LNG to India has been finalised."

On Monday, Foreign Secretary Shyam Saran, asked whether India's vote against Iran would affect the country's energy security, said, "I see no reason why there should be ... any kind of impact on our energy security."

In Teheran, the Iranian Foreign Ministry spokesman expressed surprise on Tuesday at the manner in which India had voted. He said: "Iran will revise these [economic] relations, and these countries [that voted against Teheran in the IAEA] will suffer. Our economic and political relations are coordinated with each other." READ MORE