India, Iran to resume talks on gas pipeline through Pakistan

Last Updated: Sunday, May 16, 2010 - 12:19

Tehran: After a two-year lull, India has proposed to resume talks with Iran next week on importing gas through a pipeline passing through Pakistan, but Tehran is yet to respond to the offer.

India last month proposed a meeting of the India-Iran Joint Working Group (JWG) between May 23 and 28 in New Delhi to discuss the Iran-Pakistan-India gas pipeline project, but Tehran has not yet confirmed the data, sources said.

India has been boycotting project talks since 2008 over concerns on safe delivery of gas and frequent changes in price of gas. New Delhi wants Iran to stick to the price agreed
between them in 2007 and also wants it to be responsible for safe passage of gas through Pakistan.

India`s External Affairs Minister, SM Krishna, who is here to attend the G-15 Summit, is likely to discuss resumption of dialogue on the IPI project when he meets his counterpart Manouchehr Mottaki.

Sources said the delay in Iran`s response essentially means that talks cannot happen between May 23 and 28 and new dates will now have to be discussed.

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, and wants Iran to take responsibility for safe passage of gas through Pakistan. It wants pay for the fuel only when it is delivered to it at the Pakistan-India border.

Sources said Krishna will again flag India`s concern on safety and pricing during the meeting to Mottaki. Unless the twin issues are addressed, it may not join the project even
though Iran and Pakistan in March signed an Inter-Governmental Framework Declaration to support the gas pipeline. A Gas Sale and Purchase Agreement between National Iranian Gas Export Co (NIGEC) and Pakistan Inter-State Gas Co has also been
concluded.

New Delhi is also upset with Iran`s frequent changes in
gas price. Iran had originally priced its gas at USD 3.2 per
mmBtu but later in 2007 revised the rates to USD 4.93 per
mmBtu at USD 60 a barrel crude oil prices, which was accepted
by India. Last year, it unilaterally revised it and according
to the new pricing formula, the fuel will cost New Delhi USD
8.3 at an USD 60 per barrel oil price at the Iran-Pakistan
border.

Added to this would be a minimum of USD 1.1-1.2 per mmBtu
towards the transportation cost and transit fee that India
would have to pay for wheeling the gas through Pakistan, they
said.

Sources said Tehran wants to transfer ownership of gas to
India at Iran-Pakistan border while New Delhi wants it to be
at the Pakistan-India border, thereby making Iran explicitly
responsible for safe delivery of gas.

While the 1,100-km pipeline from the South Pars gas
fields in the Persian Gulf to the 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 the
pipeline in Pakistan would make the project more bankable,
reduce the financing cost, ensure timely execution and ensure
transparent and efficient management of operations, they said,
adding that Islamabad has so far not agreed to the proposal.

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

PTI



First Published: Sunday, May 16, 2010 - 12:19

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