India ready to pay market rates for piped Iranian gas

Vol 10, PW 10 (07 Sep 06) People & Policy

Iran remains as convinced as ever that the overland gas pipeline to India through Pakistan will happen, despite growing international isolation over its uranium enrichment programme and support for Hezbollah in Lebanon.

America would like to pressurise India, senior Iranian diplomatic sources tell us, But we are getting clear indications that they wont succeed. Iranian confidence stems from a statement by PM Manmohan Singh to parliament on 23rd August that Delhi would work to make it (the pipeline) a reality.

Also encouraging was the outcome of the last Secretary-level meeting between Iran, India and Pakistan in the Delhi office of GAIL on 3rd and 4th August the third meeting at this level. After talks, visiting Iranian deputy oil minister Nejad Hosseinien met oil minister Murli Deora for 30 minutes to make recommendations that would accelerate progress towards an agreement.

Deora, we hear, was aggressive in his support of the project. India has always said that this is a commercial project and should go ahead only if commercial terms can be agreed, says an Iranian source.

We did not expect this (pro-US) conduct from Delhi but it will not affect the pipeline. We have a 3000-year relationship.

And in such a long relationship there are always ups and downs. This is a down period.

Politics aside, Tehran is excited that India and Pakistan have finally accepted the inevitability of linking the Iranian piped gas price to international prices of LNG, something Delhi has refused until now. Much progress was made during the last meeting, we hear.

India and Pakistan for the first time agreed that the price should be linked to the international price, possibly Brent. But Iranian relief at Indias about-turn is overshadowed by frustration at the snails pace of talks.

During the first (Secretary-level) round in Tehran India and Pakistan refused to pay more than $2.25 per mmbtu; in the second round in Islamabad they offered $4.25; in the third round in Delhi they agreed to international prices. This is wasting time.

If they had agreed this from the beginning construction could have begun by now.

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