New Delhi: The India-Iran joint commission is meeting in Tehran on 1 November and will discuss the Iran-Pakistan-India (IPI) pipeline project, but officials say it is unlikely that India will go ahead with the deal having signed a civilian nuclear agreement with the US.
“This visit is only to soothe ruffled feathers after (India signed) the Indo-US civil nuclear deal,” said a senior minister who didn’t wish to be named. “The moment Prime Minister Manmohan Singh said that India doesn’t want another nuclear power in the neighbourhood, the pipeline project went off for us,” he added, referring to the $7.4 billion (Rs37,074 crore today) IPI pipeline that Iran plans to move ahead on—with or without India.
Precious commodity:A file photo of a gas pipeline. India faces a shortfall of natural gas that is expected to last till 2012, while Iran has the world’s second largest oil and natural gas reserves. Diego Giudice / Bloomberg
External affairs minister Pranab Mukherjee will lead the Indian team to the meeting of the joint commission, which promotes bilateral cooperation.
The talks for the 2,300km pipeline, expected to carry 60 million cubic metres of gas a day (mscmd), started in 1995, but have been delayed over gas price and transportation fees India would have to pay Pakistan.
“There are certain technical issues regarding transportation and price. These issues will be raised at the India-Iran joint commission,” Mahmood Ali Abadi, director general, foreign investment office, had told Mint on 16 October during a visit to India.
Iran and Pakistan recently decided to go ahead with the project and even extended a partnership offer to China.
“We cannot wait any more. We are happy to limit the pipeline to Pakistan, that is, do an IP, or Iran-Pakistan, pipeline. If India is willing, we are more than happy to have an IPI. If China is willing, and western China is deficient (in energy), then it could be IPIC. Or, it could just be IPC (Iran-Pakistan-China),” Pakistan foreign minister Makhdoom Shah Mahmood Qureshi had told Mint on 26 May.
“We are aware that Pakistan and Iran are going ahead with the pipeline,” said a senior petroleum and natural gas ministry official, on condition of anonymity. “They have been faster than we have been. However, I am not aware of us withdrawing from the project.”
Iran has the world’s second largest oil and natural gas reserves. India is short on natural gas that is expected to last till 2012—the country needs at least 180mscmd of gas, and supply is at 81mscmd. India imports some 12mscmd of gas bought in spot markets.
“Although none of our national energy plans had considered Iran gas with certainty, we will miss this source. Any piped gas is preferred over LNG (liquefied natural gas) for cost and logistics reasons,” said Deepak Mahurkar, associate director, oil and gas industry practice at consultancy firm PricewaterhouseCoopers.
“But the government needs to consider this as a reality and provide thrust to domestic gas development. With reducing oil prices, companies would need much less risky countries to invest in.”