India misses Pipeline of Prosperity

After fourteen years of delayed negotiations over what started as the Iran – Pakistan – India (IPI) cross boarder gas pipeline project, Pakistan and Iran have finally signed a $ 7.6 billion agreement in Tehran on May 20, 2010. The project termed as the ‘peace pipeline’ by officials of both countries, has been signed in presence of Pakistani President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad on the sidelines of the tripartite summit on Afghanistan Security in Tehran. The gas pipeline once operational, is expected to take care of as much as 20 per cent of Pakistan’s energy needs.

According to the initial plan, the 2700 kilometer long pipelines would cover around 1100 kilometers in Iran, 1000 kilometers in Pakistan and around 600 kilometers in India, and the size of the pipeline was estimated to be 56 inches in diameter. The estimated project completion time was estimated to be 5 years. The pipeline will deliver 750 million cubic feet of natural gas a day to Pakistan within four years. The pipeline will connect Iran’s giant South Pars gas fields with the troubled Pakistani provinces of Baluchistan and Sindh.

The IPI project was conceived in 1995 and after almost 13 years India finally decided to quit the project in 2008 despite severe energy crisis in the country. Security consideration and inability to come to an understanding with Pakistan over transmission charges saw India waver time and again over joining the project amid speculation that New Delhi is coming under Washington pressure not to do business with Tehran. Delhi has been reluctant to join the project because of its long-running distrust of Islamabad, having fought three wars since independence in 1947.

News paper reports say Pakistan too was facing severe criticism from the US over any kind of economic deal with Iran. The deal was speculated to be not welcomed by the US – because of Tehran’s suspected ambitions to build nuclear weapons. But the sudden change of stance from Pakistani government is seen as softening of stance by the US. This is perhaps the greatest diplomatic coup d’état Pakistan has pulled off in the recent past.

In the aftermath of signing the landmark civilian nuclear deal between President George Bush Junior and Prime Minister Manmohan Singh in 2008, Pakistan too argued that it too should make a similar deal with US, but Washington had not shown much enthusiasm. But now Pakistan has cheaper source of power compared to India’s investments in civilian nuclear reactors to help fulfill its increasing energy demand.

Photo : Copyright with BBC

    • Judas Iscariote
    • October 20th, 2010

    The US has plenty of reasons to want to keep the heat on Iran. Its anti-American rhetoric, support of terrorist groups, and determination to maintain a nuclear capability mean that Tehran will remain a target of U.S. suspicion for the foreseeable future. But US needs to be more sensitive to the coalescing economic interests of the two South Asian giants in the pipeline deal. India, long friendly with Iran, though have pulled out of the project for now, covets the greater energy security the pipeline would bring and it might join back later. And Pakistan desperately wants the annual transit fees – up to $600 million – it would reap from letting the pipeline cross its territory. That’s a tempting amount for a poor country — and a more certain deal than US – supported alternative pipelines from Qatar or Turkmenistan. And surprise surprise China too might join the project, since India has pulled out and then the pipeline might pass through Gilgit.


    • Hossain Mansur
    • October 24th, 2010

    Iran, which has the world’s second-biggest reserves after Russia, is going to transport natural gas to Pakistan for now. New Delhi sure can join in later. India has always been hesitating over the project because of repeated disputes about prices and transit fees and its volatile relationship with Pakistan. Maybe even the energy-hungry Bangladesh may join in.


    • John Gobin
    • October 26th, 2010

    Tehran and Islamabad signed the smartest export deal which commits the Islamic republic to supplying its eastern neighbour with natural gas from 2014. New Delhi under US pressure sure is stupid to have missed the “pipeline of prosperity”.


  1. This pipeline is Iran’s new lifeline and US seemingly stymied in attempt to rein in Iranian gas exports. India’s new options include Turkmenistan, Burma, an ambitious 2,000 km Middle East (ME) deep sea gas pipeline from Qatar via Oman to India’s west coast states of Gujarat or Maharashtra.


    • Loraine Yelvington
    • November 1st, 2010

    Iran wants to charge as much for natural gas as it does for LNG (about $4 per million British thermal unit [MBTU]), whereas the main Indian consumers – the fertilizer and power sectors – are unwilling to pay more than $3 per MBTU. With the addition of transportation and transit charges to the Iranian price, the gas would end up costing $4.50 per MBTU. So it is a smart move by the Indians.

    Thanks !! Amazing stuff thanx


    • Sajjad Hussain
    • November 1st, 2010

    Tehran, was insisting on a “take-or-pay” agreement, in which India must pay for the agreed amount of gas even if it does not take delivery of it. India on the other hand prefered a “supply-or-pay” contract, in which Iran must deliver gas to the Indian border or pay for the contracted quantity. Also Tehran had rejected India’s request for natural gas that is rich in petrochemicals, preferring instead to deliver “lean” gas that does not contain butane, ethane, or propane. So may be smart move by New Delhi.


    • branchenverzeichnisse
    • November 7th, 2010

    The conclusion of the deal with India in 1993 was potentially very important for Iran, then, as it was intended to curtail some of its political isolation and earn it a place in the international gas market. But Tehran’s pricing policies and Washington’s opposition have Tehran’s effort to breakout has finally lead to New Delhi’s pull out. Qatar, with the world’s third-largest natural-gas reserves is another competitor for the Indian market.


    • Farzad
    • November 9th, 2010

    India needs energy for keeping its growth. There is a conflict between Pakistan and India for years and no one knows when it gets over .Being under sanctions for 31 years Iran wants to decrease its problems by helps of these two neighboring countries. Unfortunately we are witnessing that USA is meddling into the internal affairs of both these two countries. 31 years ago we Iranian said that we don’t want to be USA slaves any more, and we are paying it’s prize since then. We know that India’s relations with Pakistan are not good and you are worried about the peace pipe line but it doesn’t mean that we should stop negotiation. These three countries needs to get together and find a solution to solve this problem that at the end of the day makes every one satisfied.

    Farzad (Iran-Shiraz)


    • Sahib
    • December 4th, 2010

    Thank you for your comments. I am an Iranian. First I want to tell you we do not have any problem neither with Pakistan nor with India. We have historic relations with India and Pakistan and both are our neighbors. Iran has been under severe sanctions for years 31 years. But still it is stable. We do support our government no matter what. By the way India needs energy. India needs the energy in order to keeps its growth and Iran has the energy.


    • Orpha Pauker
    • December 8th, 2010

    To all of the previously mentioned commentors. Blogs could be significantly better to learn when you can maintain Your comments straightforward and to the point. No-one likes to study large comments when the idea may be conveyed using a not as lengthy comment


    • Saina Mitra
    • December 11th, 2010

    I agree with Orpha. Short and sweet is anytime better. The commentators looks like having an intellectual bend.


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