IPI pipeline remains a pipedream ?
Iran and Pakistan sign US$7.5bn gas pipeline deal
The ghost of the Iran-Pakistan-India pipeline seems to have been finally laid to rest. Tired of waiting for any decision by India, Iran and Pakistan have gone ahead to sign an agreement for laying a natural gas pipeline between the two countries. A window has been left open for India to join the project later but Pakistan has the right to charge transit fee for the gas sent through its territory. It is highly unlikely, however, that India will ultimately join the project which has been talked about for over 15 years.
Iran and Pakistan have signed a “historical” agreement for the construction of a natural gas pipeline, which will transport gas from Iran’s South Fars field to India. The deal was signed between the Inter-State Gas Systems, a semi-autonomous Pakistani company and the National Iranian Oil Company. It’s a milestone toward meeting energy needs of the country.
When completed in 2015, the US$7.5bn project will see the pumping of 750mft3 of gas per day.
However, the option of India joining the pipeline at some stage was kept open by the two countries. Though India is not a part of the deal at present, the agreement keeps the option of transporting gas for India through Pakistani territory if the pipeline eventually does extend to India. Pakistan has retained the right to charge a transit fee for gas transported to India.
The tri-nation gas project has not cleared all hurdles just yet. India has resumed interest but its External Affairs Minister, SM Krishna, said that the country was in talks with Iran as it has concerns relating to pricing and security. India has cold-shouldered the project talks since 2008, blaming Tehran for overlooking its concerns of safe delivery and high prices.
Iran, on the other hand, suggested a trilateral mechanism, insisting that ownership of gas would be transferred at the Iran-Pakistan border, while New Delhi wants it to be the Pakistan-India border, thereby making Iran explicitly responsible for the safe delivery of gas. Indian officials believe the proposal meant that New Delhi would pay for its share of gas, even if the supplies were to be disrupted in Pakistan. In addition, India and Pakistan have been unable to agree on the level of transit fees that the latter would charge the former.
Iran has continued to hope that India will join the project with Iranian officials pointing out that New Delhi is still to make any formal announcement on quitting the pipeline project.