Price will dominate Tehran talks on pipeline project

Vol 9, PW 23 (09 Mar 06) People & Policy

India, Pakistan and Iran begin their first ever-tripartite bureaucrat-level discussions in Tehran on 13th April on the long-awaited overland gas pipeline project from Iran to India through Pakistan.

Oil secretary MS Srinivasan will lead the Delhi team made up of joint secretary gas Ajay Tyagi and officials from GAIL and Indian Oil. Talks will go on till 15th March and take place against the background of US president George Bushs comments in Pakistan on 4th March that America is not opposed to the overland gas pipeline proposal.

Our beef with Iran is not the pipeline, said Bush. Our beef with Iran is the fact that it wants to develop a nuclear weapon.

Srinivasan and his team will meet with oil secretaries from Iran and Pakistan. Before they reach Tehran, technical experts form the three countries are scheduled to hold their second meeting, the first was in Delhi in January.

We received the invitation on 2nd March from Tehran for the secretary-level meeting, says an oil ministry source. This will be the first tripartite meeting of secretaries (on the project) from the three countries.

Discussions will focus on the structure of the project and the gas price. India and Pakistan are on common ground regarding the gas price, we hear.

We have a similar approach to the issue. But this will be the first time well hear the Iranian point of view.

Indian officials say there is a lot of information which is actually misinformation on the price of gas. Iran has yet to submit any price formula, we are told.

Worldwide there is no formula for pricing piped gas. All prices are the result of negotiated deals.

Piped gas is typically priced on the basis of the consumer profile and the pricing of competing alternate fuels. In India, the power sector will consume nearly 50% of any piped gas from Iran.

Competing fuels would be a mix of hydroelectricity, coal and, post 2030 nuclear fuel. There is no standard formula to price piped gas, but we have some rough idea of the power ministrys comfort level.