Iran on Tuesday reassured India that its understanding with Pakistan on natural gas pipeline did not preclude India’s participation in the project.
NEW DELHI: Iran on Tuesday reassured India that its understanding with Pakistan on natural gas pipeline did not preclude India’s participation in the project.
Iranian deputy minister Mohammed Hadi Nejad Hosseinial has indicated that there is no finality to the agreement reached with Pakistan on a single natural gas pipeline from his country.
“We have a joint commitment to India and Pakistan. We have not finalised the pipeline,” Hosseinial said after meeting Indian petroleum minister Murli Deora on Tuesday.
Iran also wants to reopen the commercial agreement for a 5 million tonne liquefied natural gas (LNG) signed between Indian Oil Corporation and the National Iranian Gas Exporting Company.
Hosseinial said there were differences between India and Iran on the LNG deal concluded in June last year.
Tehran has set July as the deadline for the pipeline project, before which the three countries have to make up their mind on the crucial issue of pricing. Hosseinial said the pipeline has a build-up time of five years.
Iran will be building a pipeline on the eastern side for supplying gas to Pakistan and India. The same pipeline will also feed its domestic market which explains its keenness to push for the project.
It appeared that Iran would go ahead with gas exports to Pakistan if an agreement was not reached with India but officials said both India and Pakistan are on the same side when it comes to the pricing formula. The two countries want that the formula which links gas price to international crude oil prices should be capped.
Iran always had the option of having a pipeline for Pakistan only but that would have been unviable. India’s joining the pipeline could have brought in the benefits of economies of scale.
Following a bilateral meeting, Tehran agreed to enhance gas supplies to Islamabad by 33% for a bilateral pipeline which appears to help getting over the viability issue.
Hosseinial said the pipeline would have a capacity of 110 million standard cubic metre a day of which 30-35 mmscmd would be required by Iran itself. Pakistan wanted about 30-60 mmscmd while India needs around 90 mmscmd.
He said the quantity could be divided among the three countries and as the demand picked up a parallel pipeline might be laid.
The looming US threat of sanctions against Iran does not seem to have any effect on the project with Pakistan petroleum secretary Ahmad Waqar terming the talks as a “breakthrough” and Deora affirming “the US cannot pressurize us”.
Iran and Pakistan are expected to reach an agreement in Islamabad on May 25. A trilateral meeting involving India will be held after this agreement and therefore the bilateral deal does not automatically translate into the end of the road for India.
Deora had meeting with new Iranian oil minister Kazem Vaziri Hamanah last week during his visit to Doha where he conveyed India’s keenness to move on the purchase of 5 million tonne LNG from Iran. The government is finding it hard to get LNG for fuelling the country’s energy requirements.
Hosseinian said the deal signed in June 2005 was not binding on Iran as it had to be ratified by “the higher authorities”.
Iran wants to renegotiate the pricing formula but India has taken a stand that the deal was sealed last year and was legally binding. Deora told reporters later that Iran must supply gas at the same rate.
Projects like Dabhol power plant and NTPC Ltd’s gas-based plants are not working to their full capacity due to non-availability of natural gas.
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