Iran Sees Gas Deal with India, Pakistan by mid-year

A01027484.jpgTEHRAN (FNA)- Iran’s ambassador to New Delhi said Wednesday that Tehran hopes to finalize the $7.4-bln IPI pipeline deal with India and Pakistan by mid-year.

The 7.5-blon-dollar project which aims to transport natural gas from Iranian oilfields to Pakistan and India was also discussed during a visit to India last month by Iranian President Mahmoud Ahmadinejad.

During his brief stopover visit to New Delhi, the Iranian president had announced that oil ministers of the three countries will finalize an agreement on all issues relating to the pipeline within three months.

“It is hoped the trilateral agreement will be signed by the middle of summer this year,” Iran’s ambassador to India Sayed Mahdi Nabizadeh was quoted as saying in an interview in the latest issue of India’s Hardnews magazine.

The project was first mooted in 1994 but has been stalled by a series of disputes over prices and transit fees.

“After the president’s recent visits (in April) to India and Pakistan, we have witnessed positive progress regarding implementation,” the envoy said.

Indian and Pakistani energy ministers met in Islamabad last month and said they had made “significant progress” in discussions on transit fees and were hopeful work could start next year.

Also last month, Iran and Pakistan said they had ironed out hurdles delaying the 2,600-kilometre (1,615-mile) scheme.

India has been under pressure from the United States not to do business with Iran.

But India, which imports more than 70 percent of its energy needs, has been trawling for new supplies of oil and gas while ramping up domestic production to sustain its booming economy.

“This project will be the biggest economic project based on energy in the Asian region and these three important countries (India, Pakistan and Iran) will be united with each other and their economic interests will be tied up with each other,” the Iranian envoy said.

Earlier this year New Delhi told the US not to interfere in its dealings with Iran after a State Department spokesman said Washington would like India to put pressure on Tehran over its nuclear program.

India replied Iran had the right to peaceful use of nuclear energy but has asked Tehran to still enhance cooperation with the United Nations nuclear watchdog.

India in 2005 signed another deal with Iran, which has the world’s second largest known gas reserves after Russia, for the supply of five million tons of gas annually for 25 years.

However that agreement, estimated at over 20 billion dollars, has also stalled over price disputes.

Iran was still interested in pursuing the deal but “it is necessary that every agreement be considered and finalized on the basis of the current international market situation and on the basis of a win-win formula,” the Iranian envoy said.

Despite the United States’ aggressive policy and heavy pressures against New Delhi, India’s Petroleum Minister Murli Deora held talks with his Pakistani counterpart Khwaza Asif last month, where he reiterated New Delhi’s commitment to the pipeline.

Deora also admitted there were still differences over the transit fees to be charged by Pakistan for Iranian gas to be transported through its territory to India.

Talks are more likely to progress after Pakistan elected Yousuf Raza Gillani as its new prime minister this week, ending six months of political instability that culminated with the suspension of the constitution in November and the assassination of former Prime Minister Benazir Bhutto in December.

Oil ministers from India and Pakistan agreed on the principles of the project, they said on April 25. The South Asian neighbors resumed talks on the 2,100-kilometer (1,300-mile) pipeline a month after a newly elected government led by Prime Minister Yousuf Raza Gillani took office in Pakistan.

Iranian Oil Minister Gholam Hossein Nozari had also earlier said that India is keen to be a partner in the multi-billion Iran-Pakistan-India (IPI) gas pipeline project and has promised to resist “all external pressures on the issue”.

According to Indian ministry sources, the IPI gas pipeline is quite crucial for New Delhi as after signing of the agreement, 60 million standard cubic meters per day (mmscmd) of gas is expected to be supplied in phase-I, which will be shared equally between India and Pakistan.

In phase-II, 90 mmscmd of gas will be supplied to India and Pakistan. So far six meetings of the trilateral joint working group (JWG) of the participating countries have been held with the last meeting being held in New Delhi on June 28-29, 2007.

India, Asia’s third-largest economy, can produce only half the gas it needs to generate electricity, causing blackouts and curbing economic growth. Demand may more than double to 400 million cubic meters a day by 2025 if the economy grows at the projected rate of 7 to 8 percent a year, according to the Indian oil ministry.

The several-billion-dollar project stalled because India couldn’t agree with Islamabad on the fees it will pay Pakistan for transporting the fuel. The 2,100-kilometer (1,305- mile) pipeline was shelved when the nuclear-armed neighbors came to the brink of war after a terrorist attack on India’s parliament in 2001.

Iran plans to start exporting gas to Pakistan in 2011. Iran has completed half the pipeline, which can carry 110 million cubic meters of gas a day, National Iranian Gas Company (NIOC) said this month. India uses about 108 million cubic meters of gas a day, according to a BP Plc report.

The Iranian oil minister also said that Tehran has sent a letter to Pakistan asserting that the export of gas to India through the pipeline is of paramount importance for the country.

Yet, the United States, which is at odds with Tehran over its nuclear progress, is exerting pressure on India to withdraw from the project.

According to Nozari, “Indian officials have voiced interest in the project and stated that no external power can influence them.”

The US is at loggerheads with Iran over Tehran’s independent and home-grown nuclear technology. Washington has laid much pressure on Iran to make it give up the most sensitive and advanced part of the technology, which is uranium enrichment, a process used for producing nuclear fuel for power plants.

Washington’s push for additional UN penalties contradicted the recent report by 16 US intelligence bodies that endorsed the civilian nature of Iran’s programs. Following the US National Intelligence Estimate (NIE) and similar reports by the IAEA head – one in November and the other one in February – which praised Iran’s truthfulness about key aspects of its past nuclear activities and announced settlement of outstanding issues with Tehran, any effort to impose further sanctions on Iran seemed to be completely irrational.

The February report by the UN nuclear watchdog, the International Atomic Energy Agency, praised Iran’s cooperation in clearing up all of the past questions over its nuclear program, vindicating Iran’s nuclear program and leaving no justification for any new UN sanctions.

Tehran says it never worked on atomic weapons and wants to enrich uranium merely for civilian purposes, including generation of electricity, a claim substantiated by the NIE and IAEA reports.

Iran has insisted it would continue enriching uranium because it needs to provide fuel to a 300-megawatt light-water reactor it is building in the southwestern town of Darkhoveyn as well as its first nuclear power plant in the southern port city of Bushehr.

US President George W. Bush finished a tour of the Middle East in winter to gain the consensus of his Arab allies to unite against Iran.

But hosting officials of the regional nations dismissed Bush’s allegations, describing Tehran as a good friend of their countries.

Bush’s attempt to rally international pressure against Iran has lost steam due to the growing international vigilance, specially following the latest IAEA and US intelligence reports.

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