BHP team to visit Delhi for talks on overland pipeline

Vol 8, PW 21 (26 Jan 05) Midstream & Downstream

BHP Billiton of Australia is accelerating efforts to move the dormant Iran to India overland gas pipeline off the drawing board and onto the ground.

Early next month a top-level BHP team is expected in Delhi for talks with oil and foreign ministry officials to get the project moving. BHP would like these discussions to be held at the ministerial level but dont expect any dramatic progress.

A well-placed source tells us the talks are likely to be general and more to do with information sharing, revolving mainly around mitigation of risk and addressing Indias security concerns over the pipelines passage through Pakistan. BHPs high-level visit to India is timed to coincide with a planned meeting of the Indian and Pakistani oil and foreign ministers where an overland gas pipeline from Iran will be one of the items on the agenda.

BHP is also conducting behind-the-scenes discussions with the governments of Iran and Pakistan on the overland gas pipeline. In October last year, a team of BHP executives travelled to Pakistan to meet senior energy ministry officials.

Talks between BHP and Pakistan are at a more advanced level than with India. From 2008-10 domestic gas supplies in Pakistan are likely to sharply decline and this has prompted Islamabad to give the overland pipeline high priority.

Pakistans need for alternative supply sources is much greater than Indias, we learn. BHP feels that Indias participation in the gas pipeline is needed to help lower project costs.

India is also a bigger market than Pakistan and if Delhi agrees to join the project, Pakistan will be paid a $150m transit fee. Pakistan will not get the transit fee just to allow the pipeline across its territory, says another source.

One of the key conditions is that Pakistan must ensure security of the pipeline through its territory.

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