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Will Iran pipedream remain just a dream?

By Sheela Bhatt in New Delhi
June 28, 2005 02:20 IST
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The next time you hear talk of the Iran-Pakistan-India gas pipeline, take it with a liberal dose of salt.

According to a senior executive of National Iranian Gas Export Company, the Indian government has not yet taken the decision to join the project.

India is just evaluating the options it has and is not yet politically ready, he said.

While talking exclusively to during his visit to New Delhi, he said, "Iran appreciates India's interests in the project but India is still indecisive."

He added: "Though India-Pakistan relations are moving positively, Iran doesn't feel that the relations are steady enough."

The proposed Iran-Pakistan-India gas pipeline, dubbed "pipedream" and "Iran-India pipe bomb" by critics and "inevitable in view of India's dire need for energy" by its supporters has been one of the most-written about project in recent times.

But, an Iranian executive says that the realities between India and Pakistan will keep its progress very slow.

He said, "Only the pre-feasibility report has been prepared. There is no agreement yet over the important feasibility report."  

He said that right now the negotiations are on to divide the cost of the expensive study. The progress over the cost factor is quite slow, he said.

According to the Iranian agency report, India's Reliance Industries Limited has shown interest in the gas business in partnership with gas Authority of India Limited. NIGEC, Gail, Interstate and Sui gas of Pakistan are the other consortia, which have intimated their willingness to participate.

Meanwhile, BHP of Australia is said to have conducted a `desktop` study on the on-land option from Iran to Pakistan, pending an extension to India after government-to-government discussions between India and Pakistan.

Khazar Exploration & Production Company, a subsidiary of National Iranian Oil Company, is open to the idea of collaborating with ONGC Videsh for deep sea offshore activities in the Caspian region.

Although, last week the European Union said it is not opposed to a $4 billon and more than 2500 km long pipeline project to deliver gas from Iran to India through Pakistan, America's reservations for the pipeline project are diplomatic worry for all the three participant nations.

"We do not accept the hidden and secret nuclear program of Iran...but we have no negative position on the trilateral gas project, which is still at the study level," the EU official said in Brussels.

Recently, Indian Oil Minister Mani Shankar Aiyar visited Pakistan and held talks with his Pakistani counterpart Amanullah Jadoon and later, briefed Iranian Oil Minister Bijan Zanganeh.

The United States has strongly opposed the gas pipeline project as it feels it would boost Tehran's economy and the money will be pumped into building nuclear capacity.

US is strongly campaigning against Iran's nuclear programme.

The idea of the pipeline was conceived long back but the negotiations began only in 1994. Since January 2004, the talks between the two countries picked up momentum as relations between India and Pakistan improved like never before.

The pipeline will supply gas from the massive South Pars offshore fields in the Gulf.

During his visit to Iran this month Aiyar finalised an agreement for Iran to deliver 5 million tonnes of gas to India over 25 years, and talks are on for the supply of another 2.5 mn tonnes.

According to the report of Iranian News Agency, in a bid to tap the growing gas market in India, Iran has offered equity stake in its gigantic South Pars gas field provided New Delhi buys the gas produced from the fields.

The 3,700-square km South Pars gas field, which is an extension of the Qatar north dome gas field, is located 105 km southwest of the Asalouyeh port in the Persian Gulf.

External Affairs Minister Natwar Singh has said that India is willing to consider the gas pipeline from Iran via Pakistan if Islamabad provides international security guarantees.

Iranian agency claims that India has reservations, fearing that Pakistan could disrupt supplies in the event of any major problem in their relations. But Islamabad insists it has no objection to the multi-billion pipeline with President General Pervez Musharraf assuring that Pakistan would guarantee 100 percent security to the proposed project.

The project, if implemented, would help Pakistan earn an estimated 600 million dollars annually as transit fee in case the pipeline is built.

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Sheela Bhatt in New Delhi