India proposes trilateral talks on IPI gas pipeline

Last Updated: Thursday, March 18, 2010 - 17:38

New Delhi: Days after Iran and Pakistan
signed pacts to implement a long-delayed gas pipeline, India
on Thursday said it has proposed trilateral talks in May to address
concerns that have been impeding its joining the project.

"We have genuine issues that need to be addressed before
we sign up for the (Iran-Pakistan-India) pipeline. We have
proposed dates in May for technical level talks in Tehran to
iron these out," Oil Secretary S Sundareshan said here.

New Delhi has been boycotting project talks since 2008
after its concerns of safe delivery of gas were ignored. It
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.

"... As far as India is concerned, we are in consultation
with the government of Iran. We have certain concerns.
Concerns about pricing, concerns about security, which have
been taken up with the government of Iran," External Affairs
Minister S M Krishna said here.

According to Iran`s official news agency IRNA, Tehran and
Islamabad on Tuesday signed Operational Agreement and the
Heads of Agreement in Turkey though it was not clear how these
were different from the one that was inked during President
Asif Ali Zardari`s visit to Tehran in May 2009.

It was stated last year that the two sides would next
sign Gas Sales and Purchase Agreement--- a pact that allows
gas sale at agreed terms and without which no transaction can
take place. It was not clear if this was one of the agreements
that Inter-State Gas Systems, a semi-autonomous Pakistani
company and National Iranian Oil Co (NIOC) signed on Tuesday.

Officials said Tehran has been insisting that ownership
of gas would be transferred 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 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.

Under the terms of deal signed Tuesday, Iran will supply
750 million cubic feet a day of gas to Pakistan for 25 years.

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 USD 3.2 per mBtu
but later in 2007 revised the rates to USD 4.93 per mBtu at
USD 60 a barrel crude oil prices, which was accepted by India.

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

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

Gas from the Panna/Mukta and Tapti fields in Mumbai
offshore fetches the maximum USD 5.70 per mBtu, while Reliance
Industries` Krishna Godavari basin gas has been priced at USD
4.20 per mBtu if crude oil price was USD 60 or more.

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.

PTI



First Published: Thursday, March 18, 2010 - 17:38

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