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| June 2, 2005 | Thursday | Rabi-us-Sani 24, 1426 |
India hopes to reach pipeline accord
NEW DELHI, June 1: Indian Oil Minister Mani Shankar Aiyar is hopeful talks with Pakistan on a proposed route for a gas pipeline from Iran will lead to an agreement that will attract companies and finance for the multi-billion dollar project. Mr Aiyar will travel to Islamabad at the weekend to meet his counterpart Amanullah Khan Jadoon to discuss a proposed 2,775-kilometre energy corridor in Pakistan to deliver gas from Iran’s South Pars field to the Indian border.
“If security and other issues are resolved with Pakistan, I would say construction could begin with all deliberate speed in three years,” Mr Aiyar told AFP.
“This could be an international consortium or other entity. We are only a customer right now, but security and other agreements will make this project viable for investors.”
Mr Aiyar said from India’s side, the actual construction of the pipeline would be the job of Iran and Pakistan. India’s role would be to negotiate a price for the gas if the pipeline reaches its border.
“There are talks with Iran on pricing,” he said declining to discuss specifics.
Mr Aiyar’s visit to Pakistan has already caught the attention of specialized law firms that negotiate major pipeline deals around the world, who note that these take years of complex legal and financial deals before construction begins.
“I would say the recent peace talks between India and Pakistan have moved this project up a few notches from the bottom of the list,” said Samantha Hampshire, a London-based partner with the global project finance group of law firm Mayer, Brown, Rowe and Maw.
“These are enormously complicated projects because they cross several countries and involve hundreds of parties. Massive investment is required. But in energy circles, the fact that talks are going on and there is more stability in India-Pakistan relations means there is certainly more optimism a pipeline is possible.”
Mr Hampshire said if agreement is reached between the three countries, it would likely take five years before the “first shovel of dirt is turned.”
The proposed pipeline, estimated to cost four billion dollars, comes against a background of improving relations between New Delhi and Islamabad. But it would travel through Pakistan’s Balochistan province, which has been under a low-level tribal insurgency including attacks against existing gas pipelines in the region.
India and Pakistan have been engaged in a slow-moving peace dialogue since January 2004.
“There are two sets of agreements. Iran and India have to agree on a price. Iran and Pakistan have to agree on building the pipeline. There could be a necessity for a tri-lateral meeting to outline the terms,” Mr Aiyar said.
“If and when they issue a tender, Indian companies could bid for work. I’m keeping an open mind on that.”
Pakistan Prime Minister Shaukat Aziz said in February the project by itself could be a vital spur to trade relations.
“Nobody disputes the merit of having more trade. In this context, the gas pipeline will be a major effort to link the two countries. The proposed gas pipeline project would be a huge economic confidence-building measure ... a standalone project of huge significance,” he said.
Iran and India have been talking about a pipeline since 1994 but longstanding hostility between India and Pakistan has stood in the way.
Other countries too are eager to tap South Pars, the largest offshore field in the world, located on the Iran-Qatar border in the Persian Gulf and is shared by the two countries.
The field accounts for half of Iran’s estimated 23 trillion cubic meters of gas reserves, about 16 per cent of the world’s total, second only to Russia.
India right now produces about 50 per cent of the gas it needs and imports 7.5 million tons of liquified natural gas a year as its economy guzzles more fuel to keep growing.
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