IRAN-INDIA GAS PIPELINE

Iran has offered to foot 60 percent of $ 5 billion cost of 2670 km long on land pipeline from Assaluyeh to Delhi via Pakistan

From SHAMIM AHMED RIZVI,
 Islamabad

Nov 01 - 07, 2004

Now that the ongoing series of confidence building measures has made a mark improvement in Indo-Pak relations, one can certainly look forward that the dream of gas pipeline from Iran to India through Pakistan can become a reality in the near future. This perception was confirmed by no less a person than the Prime Minister himself.

Prime Minister Shaukat Aziz, while giving an interview to a panel of a national English daily in Islamabad on Saturday last, said he expected palpable progress on Iran-India gas pipeline via Pakistan project in the next 12 months. With significant improvement in relation between India and Pakistan, Iran felt encouraged to take up this matter with India again and found a favourable atmosphere. Iranian Deputy Minister for Economic Affairs was reported to have pitched, once again for the adoption of the overland route for the pipeline project. And in doing so, he reportedly based his argument that Pakistan now opting for a stake in the project both as an investor as well as buyer of around a third of the 20 million cubic meters per day of gas supplies, the security of the project will be fully assured. To make the deal more attractive Iran has offered to foot 60 percent of $ 5 billion cost of 2670 km long on land pipeline from Assaluyeh to Delhi via Pakistan. He found his Indian counterparts more receptive to the idea instead of consisting on deep-sea route.

This approach, adopted by Iran, need not be taken as being inspired by any special pro-Pakistan gesture, just for the sake of it. In fact, it has much to do with Iran's overall reluctance for the deep-sea route. It stems, as the report under reference has revealed, from the fact not only would a deep sea pipeline, at a depth of 3500 metres, be financially and technologically more strenuous, it would also take more time to construct. It also has it that in view of the scramble by some other West Asian suppliers to capture the huge and growing Indian market, Iran is keen to finalize a deal. Also, with most Western companies barred from investing in Iran due to US sanctions, the country's energy sector has been languishing due to the paucity of much needed investment.

Indians are also realizing the immense benefit of Iran gas through land route pipeline via Pakistan. Pleading for Iran Pakistan-India gas pipeline, Union Petroleum Minister Mani Shanker Aiyar has written to Prime Minister Dr. Manmohan Singh suggesting "conversation without commitment" among the petroleum ministers of the three countries. In his letter written to the prime minister, Aiyar said, "with respect to the Iran-Pakistan-India pipeline, the Iranian Oil Minister has conveyed to me, through his ambassador, an informal suggestion for 'conversation without commitment' between the petroleum ministers of these three countries. I discussed this with External Affairs Minister K. Natwar Singh, who is himself inclined but asked me to first take this up with you.

Similar proposals have been made in the past but they died because of security concerns involving Pakistan, the report said adding, now Aiyar has written to the prime minister suggesting a novel approach calling it "conversation without commitments". Backing up his proposal with an overview of the energy situation to show just how pressing the need for radical solutions is, Aiyar, pointed out that while India's crude oil production will rise no more than 50 million tonnes over the next two years, its requirement could touch 300 million tones if it is to sustain a 7-8 percent growth in GDP. The answer, he argued, would be to access gas wherever possible.

Domestically, the needs cannot be met as the production is stuck at 90 million standard cubic metres of gas per day, while the requirement has already crossed 120 million cubic metres. Twenty years down the road, the requirement could touch 391 million cubic metres. "It would be in our larger national interest to encourage this demand to grow to lower the appetite for crude, "added the report quoting the letter. In fact, to push the proposal forward, Aiyar is willing to discard even the South Bloc line that if Pakistan is interested in seeing the pipeline running through its land, it must grant most favoured nation status to imports from India, maintained the report.

Without waiting for India's final acceptance of the project, Pakistan and Iran have already jointly started work on the proposed as Pakistan also needs Iran gas. In order to supplement its additional gas requirement by 2009 Pakistan has decided to go ahead with the Pakistan-Iran gas pipeline without waiting for Indian decision. They have decided to go ahead with the project without Indian participation. India could join in at a later stage.

Sources informed that Iranian government officials in their meeting with Pakistani authorities have consented to bring the gas pipeline from South Paras gasfield to Pakistani border. Pakistan would now be required to lay pileline from Pak-Iran border to Sadiqabad. The gas could then be transmitted to the distribution system of both Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Pipeline Limited (SSGC). Both Iran and Pakistan have the expertise and competence to lay gas pipelines of top international quality. They might not require any outside assistance in this regard though Asian Development Bank (ADB) is coordinating with both countries for soft term financial assistance.

Pakistan has increased the use of natural gas to replace expensive petroleum product during last four years. Planners have laid the required infrastructure to use gas from all newly discovered gasfields. The gas supplies through updated infrastructure has increased by 40 percent this year. Another 300 kilometer pipeline is being laid from Sukkur to bring 300 million cubic feet of gas in the main distribution system. New gas discoveries are also expected every year. The gas has already replaced furnace oil as the main fuel of the industries. Pakistan is converting on average 100,000 petrol run vehicles to Compressed Natural Gas (CNG). The planners expect the petrol demand to stagnate, as the conversion rate of petrol run vehicles in coming years would be equivalent to yearly addition of new vehicles on Pakistani roads.

It was found that Pakistan is currently working on three pipeline projects. They are Turkmenistan-Afghanitan-Pakistan pipeline project. The second is the Qatar pipeline project and the third is pipeline from Iran. The problem with the first project is that it carries security risk because of instability in Afghanistan. Moreover, the gas price from Turkmenistan would be higher as Pakistan would have to pay the transmission fee to Afghanistan. The Qatar pipeline project is costly. Iran-Pakistan gas pipeline project is the cheapest, most secure and more viable.