India’s Mukherjee to Visit Tehran Friday

A04744995.jpgTEHRAN (FNA)- New Delhi’s External Affairs Minister Pranab Mukherjee is expected to pay a visit to Tehran on November 1 to discuss the Iran-Pakistan-India (IPI) pipeline project within the two countries’ joint commission.

Mukherjee will lead the Indian team to the meeting of the joint commission, which promotes bilateral cooperation.

The talks for the $7.4bln, 2,300km pipeline, expected to carry 60 million cubic meters of gas a day (mscmd), started in 1995, but have been delayed over gas price and transportation fees India would have to pay Pakistan.

“There are certain technical issues regarding transportation and price. These issues will be raised at the India-Iran joint commission,” Mahmood Ali Abadi, director general for the foreign investment office had told Mint on 16 October during a visit to India
Iran and Pakistan recently decided to go ahead with the project and even extended a partnership offer to China.

“We cannot wait any more. We are happy to limit the pipeline to Pakistan, that is, do an IP, or Iran-Pakistan, pipeline. If India is willing, we are more than happy to have an IPI. If China is willing, and western China is deficient (in energy), then it could be IPIC. Or, it could just be IPC (Iran-Pakistan-China),” Pakistan foreign minister Makhdoom Shah Mahmood Qureshi had told Mint on 26 May.

“We are aware that Pakistan and Iran are going ahead with the pipeline,” said a senior Indian petroleum and natural gas ministry official, on condition of anonymity. “They have been faster than we have been. However, I am not aware of us withdrawing from the project.”

Iran has the world’s second largest oil and natural gas reserves. India is short on natural gas that is expected to last till 2012-the country needs at least 180mscmd of gas, and supply is at 81mscmd. India imports some 12mscmd of gas bought in spot markets.

“Although none of our national energy plans had considered Iran gas with certainty, we will miss this source. Any piped gas is preferred over LNG (liquefied natural gas) for cost and logistics reasons,” said Deepak Mahurkar, associate director of the oil and gas industry practice at consultancy firm PricewaterhouseCoopers.

Iran and Pakistan initiated a Gas Sales Purchase Agreement earlier this year. India and Pakistan have also resolved all bilateral issues including transit fee which saw New Delhi boycotting IPI pipeline talks for about a year.

India has more or less agreed to give Pakistan a transit fee of $200 million per year, which is equivalent to $0.60 per million British thermal unit for allowing passage of the pipeline through that country.

India and Pakistan finally agreed in February 2007 to pay Iran $4.93 per million British thermal units ($4.67/GJ) but some details relating to price adjustment remained open to further negotiation. There was a breakthrough in the talks in April 2008 when Iranian President Mahmoud Ahmadinejad visited Pakistan and India.

According to the project proposal, the pipeline will begin from Iran’s Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.

The gas will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 billion cubic meter of natural gas per annum, which is expected to be later raised to 55 billion cubic meter. It is expected to cost $7.4 billion.

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.

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 in April. India uses about 108 million cubic meters of gas a day, according to a BP Plc report.

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