India begins talks with Pakistan on Iran gas pipeline

Vol 10, PW 21 (22 Feb 07) People & Policy

India begins talks with Pakistan today (Thursday) to accelerate progress on the stalled three-nation project to import gas by pipeline from Iran.

Oil secretary MS Srinivasan is leading the Indian delegation to Islamabad for two days of talks, which follow the last round of tripartite discussions in Tehran on 24th and 25th January. During that meeting, Iran issued India an ultimatum: agree our gas price within four weeks or we cut a separate deal with Pakistan.

PETROWATCH learns the main areas of discussion in Islamabad will focus on the pipeline tariff for Iranian gas and transit fees through Pakistan, unlike the talks in Tehran, which centred on the price of Iranian gas. Precise numbers are unlikely to emerge from the Islamabad talks.

“We are looking more at a formula,â€‌ we hear. “We have a fairly good idea about the relationship between crude oil prices and gas.

We also have a fairly good idea of the prices acceptable to the power and fertiliser sectors (in India).â€‌ Promisingly, the ministry tells us the Iranian gas price accepted by Pakistan during the 24th and 25th January Tehran meeting, “is not out of rangeâ€‌ for India, even though it did not accept it then.

“Because it is not out of range we decided to hold talks with Pakistan.â€‌ Adds our source: “The transit fees and tariff should be either a percentage of the gas price or fixed per mmbtu of gas and not an absolute number.

â€‌ Security and management of the pipeline through Pakistan, parts of which are ungovernable, will also figure highly in talks. “We will also discuss the structure of the project,â€‌ adds our source.

India remains acutely sensitive to pipeline security, particularly the threat of attack by terrorists outside the control of Pakistani authorities. Should the pipeline materialise, Iran is ready to deliver 60m cm/d to its border with Pakistan.

From there it will travel some 750-km through Pakistan before reaching the Indian border in northwest Rajasthan and the energy hungry north Indian market.

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