India out; Iran, Pakistan seal gas deal

m.today

Tehran, June 14 :Iran has formally signed a $7.6-billion cross-border pipeline deal to supply 750 million cubic feet of natural gas daily to Pakistan from mid-2014, ignoring India that was part of the original plan conceived in the 1990s.

The pipeline will connect Iran’s giant South Pars gas fields with Pakistan’s restive Balochistan province in the southwest and Sindh in the south. Once the gas starts flowing in, it will account for 20 percent of Pakistan’s needs, IRNA reported.

"We explicitly announce that as a country having huge gas reserves, Iran will play a key role in guaranteeing global energy security in the future," Oil Minister Masood Mir-Kazemi was quoted as saying by the official agency after the deal was inked in Tehran.

 

Iran has already laid around 900 km out of the 1,000 km of the pipeline envisaged on its territory. Now, Pakistan will have to construct about 700 km from the border to its gas transmission network at Nawabshah, near Karachi, at a cost of $1.65 billion, officials said.

There is also a provision to raise the level of import to as much as 1 billion cubic feet of gas per day during the 25-year validity of the pact, which can be extended by another five years.

"Now the project has entered into the implementation phase and there are no further formalities left in the way," said Naeem Sharafat, managing director of Pakistan’s Inter-State Gas Co who was part of his country’s delegation.

The original plan, however, was different, with India keen to secure supplies from Iran, which boasts the second largest reserves of natural gas in the world after Russia.

In the mid-1990s, Tehran and New Delhi had inked preliminary pacts to transport gas to India through Pakistan. The proposal was then called "peace pipeline’ to showcase to the world good neighbourly relations between India and Pakistan.

But India remained concerned about three aspects, preventing meaningful progress of the deal. The first was the price of gas, the second was Islamabad’s reluctance to guarantee the safety of the pipeline in its territory and the high transit fee Pakistan demanded.

India, so far, has not said formally that it had withdrawn from the project. Petroleum Minister Murli Deora had, in April, even proposed a trilateral meeting in the Iranian capital to take the talks further.

He also met Iran’s Deputy Minister for International Affairs Noghrehkar Shirazi on the sidelines of the 12th International Energy Forum at Cancun proposing such talks.

But Iran’s state-run agency has been reporting that New Delhi had, indeed, withdrawn from the project last year. The agency, however, said that Iran remained warm to welcoming India should it wish to join the project later.