India has missed yet another meeting on the Iran-Pakistan-India (IPI) gas pipeline last weekend as officials from Iran and Pakistan met in Teheran to discuss the revised project cost and a new pricing formula.
The cost of the pipeline is now projected at $9 billion, around $1.5 billion more than the earlier estimate. Also, the cost of gas for India may increase by 40 per cent if the new pricing formula quoted by Iran is accepted.
“There seems to be no urgency from India. Like last year, India has not joined Iran and Pakistan at the secretary-level meeting that took place on Saturday in Teheran,” said an Iranian official, who did not want to be identified.
“Everyone is running out of time,” he added.
However, Indian officials said they would first have to settle the issue of transportation tariff and transit fees to ensure security of the pipeline with Pakistan before they restarted talks with Iran. Indian and Pakistani officials met in April this year to settle the issue but could not reach an agreement.
Natural gas from Iran, estimated at 30 million cubic metres per day (mcmd), will increase India’s domestic gas availability by a third. In comparison, Reliance Industries Ltd (RIL) will produce 80 mcmd of gas from its block in the Krishna-Godavari basin, which will nearly double the availability in India. However, government officials and analysts said India would continue to remain gas-deficient as latent demand will crop up once the availability of gas is ensured.
Meanwhile, Iran and Pakistan claim to have covered a lot of ground on agreeing to the terms of the project. Both countries have also threatened to include China in the project if India continued to delay its participation.
Petroleum Secretary RS Pandey said earlier this week that India was still committed to the pipeline and was working towards it. “There are no dates finalised yet, but we will meet Iran and Pakistan soon,” he said.
External Affairs Minister Pranab Mukherjee is scheduled to travel to Teheran on October 31, and petroleum ministry officials say the Iran-Pakistan-India pipeline is likely to be discussed. The US, with whom India is close to signing a nuclear agreement, is opposed to any country investing in Iran, including the Iran-Pakistan-India pipeline.
However, Pandey said during an interview earlier this week that if the pipeline did not materialise it would not be due to the nuclear deal with the US. “It is only gas prices that can affect the viability of the project,” he said.
An Iran official said with the price of oil currently around 40 per cent higher than a year ago, the price of gas at the India border would be “anything above $10 per million British thermal unit (mBtu).”
In June last year, during a meeting between officials from Iran, Pakistan and India, Iran had proposed a formula that would have priced the gas at around $7 per mBtu at the Indian border. “That formula was when oil prices were around $60 per barrel,” the Iran official said.
India is also working on another gas pipeline from Turkmenistan through Afghanistan and Pakistan to India. India has offered to pay $7 per mBtu for this gas at the Turkmenistan border. The gas would cost around $10 per mBtu at the Indian border. Turkmenistan, however, is asking for a price of $12 per mBtu at its border.
