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Iran-Pakistan-India Gas Pipeline in Trouble

By Paranjoy Guha Thakurta

14 February, 2006

NEW DELHI , Feb 14 (IPS) - Along with the possibility of international sanctions hanging over Iran, the future of a 2,600 km pipeline to transport natural gas from Iran to India through Pakistan, that is actively opposed by Washington, has fallen into jeopardy.

While the three regional governments are going through the motions of planning for the seven billion US dollar project and say that it will be unaffected by an International Atomic Energy Agency (IAEA) referral of Iran's nuclear dossier to the United Nations Security Council (UNSC), analysts say chances of the pipeline being built are now remote.

Pakistan's oil minister Amanullah Khan Jadoon will be visiting India for two days from Feb. 17 to resume talks on the pipeline with Murli Deora, India's newly-appointed minister for petroleum and natural gas.

Significantly, Deora is perceived as belonging to the pro-U.S. lobby within India's ruling Congress party while Mani Shankar Aiyar, the man he replaced, a fortnight ago has openly socialist views.

The change of petroleum ministers came amid speculation that New Delhi was having second thoughts about going ahead with the ambitious pipeline project after voting against Iran at the IAEA. There is a May deadline for India to join the project.

Top independent commentators here have criticised the easing out of Aiyar. Writing in the 'Outlook' weekly, Prem Shankar Jha said Aiyar may have been moved out as a side-effect of the long-term, energy security plans he was beginning to implement that would have shifted control of the energy market in this region away from the U.S.

''Aiyar was not only determined to push ahead with the Iran-Pakistan-India gas pipeline, to which the U.S. had voiced strong objection on the ground that it would impede its efforts to isolate Iran, but he was actively putting in place an Asian gas grid that would link India with Iran, Turkmenistan, Kazakhstan, China and Myanmar,'' Jha wrote in the magazine's issue published on the weekend.

The Indo-Pakistan pipeline talks come at a delicate time as India is seeking to cement a nuclear cooperation agreement, signed last July, with the U.S., that would see Washington assist India's civilian nuclear energy programme, perhaps before Bush visits India early March.

New Delhi, which is seeking new sources of energy to feed its booming economy, has been denied access to civilian nuclear technology for over two decades after conducting nuclear tests in 1974. India has also staunchly refused to sign the Nuclear Non-Proliferation Treaty (NPT) on the grounds that it is discriminatory.

India's hopes of importing gas piped across Pakistan gained ground after the nuclear-armed neighbours, that have fought three wars, started a peace process in 2004. The pipeline project is a crucial aspect of India's efforts at attaining 'energy security', since the country currently imports three-fourths of its requirements of crude oil.

The proposed pipeline is expected to transport 90 million standard cubic metres of gas every day from Iran's South Pars fields to India from 2009-10 onwards while Pakistan would receive 60 million standard cubic meters.

Media reports have suggested that the governments of the three countries may consider building parts of the pipeline as 'independent' projects in their respective national territories to avoid sanctions.

After India stuck by its position against Iran during the February meeting of the IAEA, Iran retaliated by refusing ratify a deal to supply five million tonnes of liquefied natural gas to India from 2009.

At the meeting, the IAEA deferred by a month a vote on its resolution to report Iran to the UNSC. There are fears that if sanctions are imposed, it might force Iran, Pakistan and India to reschedule a proposed meeting in Tehran to discuss the pipeline.

Deora said the pipeline project remains on. ''There are a lot of hurdles but we hope to make things work. We need the gas from Iran to meet energy needs of India and we are committed to make the project happen.'' But energy experts who have been following the pipeline think otherwise.

''I don't foresee the pipeline being built in a hurry,'' Ravi K Batra, distinguished fellow at the Energy and Resources Institute (TERI), a New Delhi- based think tank, told IPS in an interview.

While acknowledging that the pipeline was a 'win-win-win' situation for the three countries involved, Batra pointed out at least three reasons why the pipeline project would have to be placed on the backburner.

Firstly, U.S. opposition to the pipeline is strident. ''The U.S. is not pulling its punches,'' said Batra, who served as energy expert with India's public sector oil establishment before joining TERI.

The second reason relates to the pricing of gas. India would like to pay an 'affordable price' for the gas from Iran and, according to Batra, this is a mere euphemism for prices below prevailing market rates. So far, Iran has not been obliging.

Finally, the pipeline project has been affected by the unrest in Pakistan's Baluchistan province. ''There is talk of building a longer pipeline along Pakistan's coast which may be longer but safer,'' Batra said.

Already, possibilities for an alternate pipeline to bring gas from Turkmenistan to India through Afghanistan and Pakistan is being considered, Batra pointed out.

Officials in Islamabad and New Delhi have admitted that they may have to re-evaluate the gas pipeline project if the UNSC votes in favour of imposing sanctions on Iran.

By coincidence, the first tripartite meeting on the pipeline is to be held in Tehran in March, around the same time the IAEA meets in Vienna to discuss Iran's nuclear programme.

Pakistan and Iran, at a meeting in Islamabad in January, agreed to hold the meeting as scheduled and, so far, there has been no move to defer it. The meeting is meant to finalise the project structure and draw up a framework agreement, besides firming up technical and legal issues and those relating to political insurance to ensure smooth operation.

Senior officials from the three countries attending a two-day workshop in New Delhi on Jan. 30-31 worked out some of the technical details of the project such as India's capability of making steel required for the pipeline.

For India, the project makes economic and environmental sense. Gas is much cleaner than liquid fuels and can be cheaply transported through pipelines laid on the ground.

As the owner of the world's second-largest proven natural gas reserves, Iran is keen to exploit its resources to earn revenue. It is, therefore, actively pursuing gas export deals with various countries, including India that has a huge and growing market for natural gas.

According to the Energy Information Administration of the U.S. government, natural gas use in India in 2002 was nearly 25 billion cubic metres and is projected to reach 34 billion in 2010 and 45.3 billion in 2015.

 Inter Press Service