Iran told to close gas pipeline deal by April: Final Tehran-Delhi talks soon
By Our Reporter
ISLAMABAD, March 10: The government has asked Iran to close the gas pipeline project, with or without India, by April to help meet Pakistan’s increasing gas requirements.
Sources in the ministry of petroleum and natural resources told Dawn on Monday that Iran would hold final talks with India this month to persuade it to join the $5.4 billion Iran-Pakistan-India (IPI) gas pipeline project.
If India continued to dither under US pressure, Iran would invite China to join the project, the sources said, adding that China had promised to line up financial resources for the plan. Both the countries were in contact on the issue, they said.
India has not officially indicated that it will stay way from the project but it has not come up with any commitment to finalise the deal over the past nine months.
“We have initialled the gas purchase agreement. An inter-governmental framework agreement has also been firmed up to prepare a working group for finalising the draft pact for the project,” a source said.
He said the cabinet’s Economic Coordination Committee and Iran had approved the agreements but India had not taken a final decision.
The sources said that another issue which had delayed the project was shortage of gas in Iran during winter, forcing it to import gas from Turkmenistan.
India has the option of using liquefied natural gas (LNG) but it costs 40 per cent more than the gas to be imported from Iran through the pipeline.
In the first phase, $2.4 billion will be required to build the Iran-Pakistan pipeline. If India decides to join it, there will be a requirement of stretching it by another 200km at a cost of $3 billion. “As such, the total cost will come to $5.4 billion,” a source said, adding that the major cost would be that of 56-inch-wide steel pipe of international standards.
He said Pakistan would try to reduce the price by increasing the local component of the project.
Pakistan had earlier asked Iran to enhance gas volume for Islamabad by 50 per cent under the project in case India stayed away from the deal. The government will soon formally request Iran to allocate an additional 1.05BCFD (billion cubic feet per day) for Pakistan in case India does not join the project.
Originally, Pakistan was to get 2.1BCFD of gas from the 2,600km pipeline and India was to receive 3.2BCFD. The pipeline’s length will reduce to about 1,600km if India does not join the project.
The price of Iranian gas delivered in Pakistan would be around $8 per MMBTU (million British thermal units) at the current crude oil price of about $100 per barrel under the Japanese Crude Cocktail (JCC)-based pricing mechanism. The current gas price in Pakistan is less than $2.6 per MMBTU, which means that the imported gas will be about 200 per cent costlier than domestic gas. The government, however, estimates that it will still be 40 per cent cheaper than furnace oil.
