India proposes dialogue with Iran on gas pipeline

India proposes dialogue with Iran on gas pipeline

Cancun: Seeking to revive talks that have been on freeze for almost three years, India proposed dialogue with Iran on 31 March to discuss impediments in implementation of the Iran-Pakistan-India (IPI) gas pipeline project.

Petroleum minister Murli Deora met Iran’s deputy minister for International Affairs H Noghrehkar Shirazi on the sidelines of the 12th International Energy Forum here to propose bilateral talks in May.

“We are ready to hold talks and have proposed meeting of Joint Working Group (of the two countries) on the pipeline project," Sunil Jain, joint secretary (International Cooperation), said after the meeting.

India has been boycotting formal talks on the project since 2007 over security concerns. “We are waiting for them (Iran) to decide on the dates," he said.

The New Delhi’s offer of talks follows Iran and Pakistan signing pacts to implement the long-talked project on bilateral basis.

India wants Iran to be responsible for safe passage of gas through 1,035-km pipeline length in Pakistan and would pay for the fuel only when it is delivered at Pakistan-India border.

Iran, on the other hand, has suggested a trilateral mechanism, meaning contractual provisions between three countries, to ensure safe delivery of gas to India. Under this system, New Delhi pays for its share of gas even if the supplies were to be disrupted in Pakistan, officials said.

They said Tehran has been insisting that ownership of gas would be transfered at Iran-Pakistan border while New Delhi wants it to be Pakistan-India border thereby making Iran explicitly responsible for safe delivery of gas.

India wants in-built safeguards in the contract to ensure safe delivery of gas at India-Pakistan border.

While the 1,100-km pipeline from the South Pars gas fields in the Persian Gulf to Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.

India feels that its participation in execution of pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of the operations, they said, adding Islamabad has so far not agreed to the proposal.

The pipeline has been on the drawing board since the mid-1990s, when Iran and India inked preliminary agreements to transport gas through Pakistan. It was dubbed the ‘Peace Pipeline´ because of hopes it would lead to a detente between neighbours India and Pakistan.

India says it fears for safety of the pipeline in Pakistan’s Baluchistan province, home to a militant Islamist separatist movement.

Officials said New Delhi is also upset with Iran’s frequent changes in gas price. Iran had originally priced its gas at $ 3.2 per mBtu but later in 2007 revised the rates to $4.93 per mBtu at $60 a barrel crude oil prices, which was accepted by India.

Last year, Iran again revised it and according to the new pricing formula, the fuel will cost New Delhi $8.3 at $60 per barrel oil price at Iran-Pakistan border.

Added to this would be a minimum of $1.1-1.2 per mBtu towards transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, making it the most expensive fuel in the country, they said.

Officials said Iran was not willing to commit to a supply-or-pay regime wherein it would have been held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries.

All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad.