India hedging bets on peace pipeline project

On July 20, Indian Petroleum Minister Murli Deora said that India would not succumb to external pressure when making its decision on participation in the IPI pipeline project and expressed hope that all impediments would be removed.

The IPI pipeline, which is also called the peace pipeline, is a project which would deliver natural gas from Iran to Pakistan and India.

The project was conceptualized in 1989.

It has faced many delays, mostly due to price disputes and pressure imposed on India by the major powers, pundits say.

On Tuesday, the Indian petroleum minister told the Rajya Sabha (Upper House of the Indian Parliament) that there are some problems in the implementation of the $7.4 billion IPI pipeline project.

Mr. Deora stated that U.S. Energy Secretary Samuel W. Bodman had questioned India’s participation in the pipeline project last year, but Indian officials told him the issue is an internal matter.

The Indian petroleum minister said that the project has been delayed because the price of the gas, the transit fee, and the delivery point have not been finalized.

Before his remarks, it was widely believed that India had decided to withdraw from the project to appease the United States, which viewed the deal as an Indian effort to help Iran implement its foreign policy.

However, Pakistan has stayed on board the IPI project.

Dr. Asim Hussain, the Pakistani government’s top energy adviser, said the implementation of the project is essential for Pakistan to stave off an energy crisis, Iran’s semiofficial Petroenergy Information Network (SHANA) reported.

He stated, “The delay in the IPI gas pipeline project is causing the country a loss of $5 million per day,” the Associated Press of Pakistan quoted him as saying.

Mr. Hussain said the import of 750 million cubic feet of natural gas per day from Iran would support 4,600 megawatts of electricity generation in the country, whereas 7.5 million tons of high speed furnace oil is required to produce the same quantity.

He insisted that the IPI gas pipeline project should be completed as soon as possible.

On May 23, 2009, on the sidelines of the tripartite summit on Afghanistan security in Tehran, Iranian President Mahmoud Ahmadinejad and Pakistani President Asif Ali Zardari inked the initial agreement to transfer gas from Iran to Pakistan.

On May 25, the Iranian oil minister’s representative to the IPI talks said that the door to the pipeline project is still open for India.

Hojjatollah Ghanimifard added, “Up to now, no Indian official has announced the country’s withdrawal from the project and we hope they make their decision soon.”

Iran -- with 16 percent of the global total -- possesses the world’s second largest gas reserves after Russia. Experts believe Iranian gas could supply the two countries for the next 60 to 200 years. Hence, Iran is an excellent source to meet the growing energy needs of India and Pakistan.

MRK/SJ/HG

END

MNA