Himalayan News Service

New Delhi, May 22:

Keen to make the much talked about Iran-India gas pipeline a reality, Indian petroleum minister Mani Shankar Aiyar will be holding the first extensive talks with Pakistan on June 4-7 to explore the viability of the tri-nation project. “Pakistan has proposed June 4-7 as the dates for holding bilateral talks on hydrocarbon cooperation. It comes in the wake of a joint statement issued during the visit of Pakistan president Pervez Musharraf for promoting hydrocarbon cooperation, including trans-national pipelines,” a petroleum ministry official said.

“The visit is to probe Pakistani thinking on the viability of the project. While Pakistan has been saying there is no hitch to the project, it is only after talking to them that we will get a better sense of timing and viability,” the official said. Several technical, legal and commercial issues related to the proposed $4.5 billion pipe-line project — that at one time India had opposed on grounds that its security could not be guaranteed in transit through Pakistan — are expected to be discussed during these talks. “Iran also is waiting for the outcome of the talks as this is the first time India and Pakistan would be formally discussing the pipeline in concrete terms of quantum of gas requirements and issues related with the route and the transit fee that India,” he said.

An Iranian team is currently in the capital to work out some of the technical and commercial issues related to the project. They are also here to finalise some of the terms of the sale and purchase agreement for the 7.5 million tonnes of LNG India has committed to import from Iran. The agreement is slated to be signed during Aiyar’s visit to Tehran on June 11-13. Besides the security issues that had held up the pipeline project for over a decade, the commercial considerations are crucial as every dollar increase in price would impact the viability of the project. The transit fee Pakistan would charge would be a key component to the cost of the project. Indian consumers have been found to be very price-sensitive and are seeking to source gas at prices close to that of coal and not at par with costly fuels like naphtha or liquefied natural gas (LNG). India has expressed a desire for initial imports of about 60-70 million standard cubic metres per day (MMSCMD) of lean pipeline gas from Iran mainly for use in power generation. Over three to five years, this quantity could go up to 100 MMSCMD.

Pakistan’s estimated requirement of gas and the timeframe would be known during the bilateral talks. During Aiyar’s visit to Pakistan, accompanied by petroleum ministry officials and executives of state-owned energy majors Indian Oil Corp (IndianOil) and GAIL (India), which have been given the mandate to oversee gas imports through trans-national pipelines, he would also discuss possible diesel exports from India. Taking advantage of the short distance between the two countries, IndianOil is keen to export diesel to Pakistan initially by road and later through a pipeline. This would require Pakistan removing diesel from the list of non-permissible products for imports.