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Rediff.com  » Business » Iran aims high with 2011 target to pump gas to India

Iran aims high with 2011 target to pump gas to India

June 30, 2007 01:22 IST

Iran has set an ambitious target of pumping gas to Pakistan and India from the South Pars field through the $7-billion trans-national Iran-Pakistan-India pipeline by 2011.

"The gas supply will start in 2011," Iran's oil ministry special representative Ghanimi Fard said on Friday after meeting Petroleum Minister Murli Deora.

Fard has also invited Indian Prime Minister Manmohan Singh and Pakistani President Pervez Musharraf to Tehran in end-July for signing the pact.

He said Iran would initially supply 60 million standard cubic metres per day (mscmd) of gas, which would be shared equally between India and Pakistan.

"Almost 18 per cent of the physical work on the pipeline in Iran has been completed since last year," Fard said.

Fard said the understanding was that each country would lay the 2,100-km pipeline in its own territory. Iran will construct a 1,100-km pipeline from the Persian Gulf to the Iran-Pakistan border while Pakistan will lay 1,035 km of the pipeline from its border with Iran to the Indian border. India will then pipe the gas to consumption centres within the country.

Pakistani Petroleum Secretary Ahmad Waqar said the pipeline segment in his country would cost $2.5-2.75 billion.

GAIL has already been appointed as the nodal agency for the pipeline in India.

Petroleum Secretary MS Srinivasan said Iran, Pakistan and India had sorted out the major issues on the pipeline project, including gas availability and delivery points.

On the transportation tariff to be paid by India to Pakistan, Srinivasan said: "We agreed on the principles of calculating the transportation tariff. Understanding is more or less complete."

On the transit fee -- the fee for ensuring the security of the pipeline -- the Pakistani petroleum secretary said the issue was yet to be sorted out, and was likely to be decided at a ministerial meeting between India and Pakistan in Islamabad next month.

Meanwhile, PTI adds that the pipeline deal is likely to be signed only by September instead of July as both India and Pakistan have opposed Tehran's last-minute changes in the pricing policy.

Iran is insisting that the price of the gas be reviewed every three years in line with crude oil prices, but both India and Pakistan want the price to remain constant over the 25-year contact period.

"It is tantamount to holding a gun to our heads, as even if Iran's proposed gas price after three years is not acceptable to us, we will not be able to do much. We will not even be able to walk out of the project as over $4 billion would have already been invested in laying pipelines from the Iran-Pakistan border to the Pakistan-India border and from there to consumption centres in India," PTI quoted a source as saying.

Piped Dreams

1993: India, Iran sign MoU on gas sales through a pipeline

1995: Pakistan, under Benazir Bhutto as prime minister, refuses to allow a feasibility study for the pipeline

1999: With Pervez Musharraf coming to power in Pakistan, the country joins the pipeline project

Jan 2005: Iran, Pakistan and India agree to take the project as a commercial venture. Iran agrees to supply gas to the Indian border

May-Dec, 2005: Ten bilateral meetings are held between India and Iran

February 2007: Iran proposes pricing formula for the gas, which both India and Pakistan accept. The price at the Iran-Pakistan border is fixed at $4.93 per mBtu

June 2007: Convergence between India and Pakistan on transportation tariff

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