The Telegraph
Since 1st March, 1999
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Pipeline only if price is right

New Delhi, March 16: Petroleum minister Mani Shankar Aiyar today said India would agree to the Iran-India pipeline through Pakistan only if the price of the gas proved affordable to the fertiliser and power sectors.

While both Iran and Pakistan have been keen on pushing through the pipeline, India still has reservations on pricing and security.

Pakistan wants a hefty transit fee that would jack up the price of the gas for India. Iran has also been trying to benchmark the price with reference to the more expensive liquefied natural gas, which is priced at over $4 per million British thermal units (Btu).

The Indian power and fertiliser sectors, which are the main consumers of natural gas, feel any price above $3 per million Btu is not affordable. The calculation is based on the fact that the price at which electricity and fertilisers are being made available to consumers by these units is also fixed.

These units are currently being supplied natural gas from ONGC and OIL fields at a price of around $2.5 per million Btu through the Gail pipeline network.

Clearly, Pakistan has nothing to lose if the pipeline comes through as it will get gas at India's cost, while Iran is desperately eyeing the huge Indian market, cornered as it is by the US. Even companies such as British Petroleum, which is engaged in big business with the US, are keeping away from Iran.

India quite recognises the high security risk and does not want to be associated with the construction, maintenance or operation of the pipeline, which will pass through 760 kms of Pakistani territory.

Aiyar has clearly stated that India will not enter into any agreement with Pakistan and deal only with Iran on the issue. It would be Tehran's responsibility to strike a deal with Pakistan for laying the pipeline and delivering the gas safely to the Indian border, the minister said.

Initial estimates suggest that 60 million standard cubic metres per day of natural gas would be available to India from Iran. Pakistan has said it would require 50 million standard cubic metres of gas per day from the Iranian pipeline. The cabinet has authorised the petroleum ministry to hold talks with Iran, Pakistan, Bangladesh and Myanmar to facilitate the laying of transnational gas pipelines. This has clearly given Aiyar more clout to carry out negotiations.

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