Doubts surface about Iranian commitment to pipeline

Vol 9, PW 8 (28 Jul 05) People & Policy

First it was India, then Pakistan, now its Iran that seems to be having doubts about the overland gas pipeline.

Mahmoud Ahmadinejads election as Iranian president has for the first time raised questions over Tehrans commitment to the project. Ahmadinejads government takes charge next month and his conservative supporters in the Majlis (parliament) are already calling for a halt to all gas export proposals.

Some are even calling for existing contracts to be cracked open. There could be a reversal on the gas pipeline project, a source in Tehran tells us.

His views match those who say Iran should not export gas. Opponents of gas exports like Kamal Daneshyar, head of the energy committee of the Majlis, believe Iranian gas should be sold at home only, or injected into depleting oil wells to boost recovery.

This group sees more commercial sense in exporting oil than gas. But another group, supported by the countrys oil ministry, says Iran has the worlds second largest gas reserves and enough for export, even after reviving depleted oil wells.

This group sees the pipeline project not only as a commercial venture, but also as a tool to extend Irans regional influence. Whoever wins, India wont see much progress on the gas pipeline or IOCs deal with Petropars until the new government settles in.

All gas export projects are waiting for the new government. More worrying for India, there could be problems with the agreement signed on 13th June in Tehran for the supply of 5m t/y LNG to India over 25 years.

This contract has Conditions Precedent like approval by the board of NIOC (National Iranian Oil Company) and the Supreme Economic Council, we learn. Neither have yet approved Indias LNG contract with Iran.

Controlled by the Iranian government, the Supreme Economic Council is chaired by the president in this case Ahmadinejad - and has the final decision on all major contracts where state funding is required. The Economic Council can ask for clarifications and might have reservations about certain issues, he adds.

It could ask for these issues to be settled.