India's Iranian gas: Talk about a
non-starter By Paranjoy Guha Thakurta
NEW DELHI - Along with the possibility of
international sanctions hanging over Iran, the
future of a 2,600-kilometer pipeline to transport
natural gas to India from Iran through Pakistan,
which is actively opposed by Washington, has
fallen into jeopardy.
While the three
regional governments are going through the motions
of planning for the US$7 billion project and say
it will be unaffected by an International Atomic
Energy Agency (IAEA)
referral of Iran's nuclear
dossier to the United Nations Security Council,
analysts say chances of the pipeline being built
are now remote.
Pakistani Oil Minister
Amanullah Khan Jadoon is scheduled to visit India
this Friday and Saturday 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-US lobby within India's
ruling Congress party while Mani Shankar Aiyar,
the man he replaced two weeks 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 in India have criticized 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, which would
have shifted control of the energy market in this
region away from the United States.
"Aiyar
was not only determined to push ahead with the
Iran-Pakistan-India gas pipeline, to which the US
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-Pakistani pipeline talks come at
a delicate time as India is seeking to cement a
nuclear-cooperation agreement, signed last July
with the US, that would see Washington assist
India's civilian nuclear-energy program, perhaps
before US President George W Bush visits India
early next month.
New Delhi, which is
seeking new sources of energy to feed its booming
economy, has been denied access to civilian
nuclear technology for more than two decades after
conducting nuclear tests in 1974. India has also
staunchly refused to sign the nuclear
Non-Proliferation Treaty on the grounds that it is
discriminatory.
India's hopes of importing
gas piped across Pakistan gained ground after the
nuclear-armed neighbors, which 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 meters of gas every day from Iran's
South Pars fields to India from 2009-10 onward,
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 this month's IAEA meeting, Iran
retaliated by refusing to ratify a deal to supply
5 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 Security Council. 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," said Ravi K Batra,
distinguished fellow at the Energy and Resources
Institute (TERI), a New Delhi- based think-tank.
While suggesting 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 back burner.
First, US opposition
to the pipeline is strident. "The US 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 gas
from Iran and, according to Batra, this is a mere
euphemism for prices below prevailing market
rates. So far, Iran has not obliged.
Finally, the pipeline project has been
affected by the unrest in Pakistan's Balochistan
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 alternative pipeline to bring
gas to India from Turkmenistan 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 Security Council
votes in favor of imposing sanctions on Iran.
By coincidence, the first tripartite
meeting on the pipeline is to be held in Tehran
next month, about the same time the IAEA meets in
Vienna to discuss Iran's nuclear program.
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 finalize 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 January 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, which has a huge and
growing market for natural gas.
According
to the Energy Information Administration of the US
government, natural-gas use in India in 2002 was
nearly 25 billion cubic meters and is projected to
reach 34 billion in 2010 and 45.3 billion in 2015.
