India unhappy at آ‘slowآ’ Iranian pace of work

Vol 7, PW 21 (14 Jan 04) People & Policy

Some senior members of the Indian consortium set up to import gas from Iran are disappointed with the slow pace of negotiations.

The Iranians keep discussing interminably, but nothing happens, reveals a source. It is very difficult to talk to them and move things forward.

Matters get complicated, because Iran has a politico-religious approach to everything. He adds: Gas sales from Iran to India have been on the agenda for the past 10 years.

Iranian ministers have been coming to India and talking about cooperation but nothing has happened even though there is considerable potential. Despite the slow pace of talks, India isnt giving up hope.

We are moving at the pace being set by the Iranians. The gas deal under discussion with NIGEC is part of an inter-government energy co-operation agreement signed in January 2003 between India and Iran.

Under this agreement, India will buy LNG or natural gas from Iran in exchange for two hydrocarbon blocks: one discovered and one exploration from a list of five. Of the discovered blocks, Iran initially offered North Azadegan, but India wants the much more prospective South Azadegan.

PETROWATCH learns the Iranians have now agreed to offer India 40% stake in South Azadegan, alongside a western oil major. Behind Irans willingness to please India, is the fact that they are sitting on 900 trillion cubic feet of gas and want to monetise it.

Iran wants to sell gas to India as LNG or through a pipeline, preferably an overland route through Pakistan. But given Indias half century of hostility with Pakistan, the overland route appears impractical.

Very soon, GAIL will be privy to a Snamprogetti feasibility study to import Iranian gas through a sub sea pipeline. The sub sea pipeline route is technically challenging and more expensive than the overland route, adds our source.

But weve no choice since the government is against the overland route through Pakistan. GAIL expects Snamprogetti to submit its final techno-commercial feasibility report by June this year.

Once we have the report we will evaluate the sub sea pipeline option against the LNG option and choose the most attractive route.