1. (C) Summary: Poloff delivered reftel on July 24. MEA
Undersecretary Jayant Khobargade (Disarmament and
International Security) expressed GOI support for the
initiative. Iranian Foreign Minister Manochehr Mottaki
confirmed in an Indian television interview that several
high-profile and critical energy deals between Iran and India
seem to have hit the skids, blaming this outcome on Indian
objections to Iranian price increases. There could be more
to it than this, however, as Teheran may be using the energy
deals to get back at New Delhi for its stance in the IAEA.
End Summary.

Indians Critical of Iranian Nuclear Objectives


--------------------------

-



2. (C) Poloff delivered reftel to MEA Undersecretary Jayant
Khobargade (Disarmament and International Security) on July


24. Khobargade stated that the GOI fully supports this
initiative and the P5 1 offer to Iran, and promised to
forward it to his superiors.



3. (U) On July 23, the Indian television news channel NDTV
broadcast an interview with Iranian Foreign Minister
Manochehr Mottaki, in which he replied to Indian Prime
Minister Manmohan Singh's publicly voiced concerns about
Iran's nuclear ambitions. In the interview, Mottaki stated
"we are transparent, Iran does not want and does not need
nuclear weapons."

Indian-Iranian Energy Deals Ready to go up in Smoke


--------------------------



--------------------------





4. (U) Mottaki also expressed doubt in the same interview
that two critical energy deals between Iran and India will be
completed, citing "changing circumstances from the time the
deal was signed." Iran reportedly signed an agreement in
2005 to supply India with 5 million tons of Liquefied Natural
Gas for USD 22 billion. According to Indian media. Iran is
now seeking to raise the original price, from USD 3.25 to USD
5.1 per million BTUs.



5. (U) The Associated Press reported on July 23 that Iran is
also trying to renegotiate prices on the gas-pipeline deal it
had made with India. Iran reportedly wants the gas price
linked to international oil prices, starting at USD 7.2 per
million BTUs - but India has said it wants to pay no more
than USD 4.25. The GOI is reportedly looking at legal
methods of enforcing the contract over Iran's objections.

India's IAEA Stance Effecting Energy Deals


--------------------------





6. (C) Though Mottaki denied any linkage between Iran's
last-minute holdup on the energy deals and India's critical
stance on Iran's nuclear ambitions, the timing seems
suspicious. India has twice voted against Iran in the IAEA,
and the Indian Prime Minister spoke out recently in
Parliament that "it is not in India's interest to have a
nuclear-armed Iran." Soon afterwards, Foreign Minister
Mottaki canceled his scheduled ministerial visit to India,
and four days later publicly announced that Iran is
rethinking its prior commitments to India on the LNG energy
deal that India desperately needs. (NOTE: The gas pipeline

NEW DELHI 00005237 002 OF 002


deal has been troubled for some time, and was expected to
fail.) Iran could be hitting back at India for its IAEA
stance, using oil as a stick.
PYATT