In the pipeline

New Delhi, July 18: India’s bid to start talks on the Iran gas pipeline project can fall foul of UN resolutions against the West Asian country. This has prompted GAIL, which is a partner in the project, to seek legal help to protect its commercial interests.

Sources said legal advisers had asked GAIL to set up the pipeline as a separate infrastructure project independent of the development of gasfields in Iran.

The two nations should reach an agreement under which the proceeds from the gas sales should be deposited in a development fund. This will not violate the provisions of the UN resolutions or face US sanctions.

The UN had passed resolutions against Iran in 2006 and 2007 to discontinue its nuclear programme. The Iran Freedom Support Act of the US imposes sanctions on entities that provide goods or services for Iran’s weapon programme.

After a gap of two years, Iran has proposed a bilateral meeting between New Delhi and Tehran. India, too, has agreed. “The dates for bilateral talks suggested by us were not accepted by the Iranian delegation. They now want the meeting to be held in Tehran and we are waiting for the fresh dates,” a senior petroleum ministry official said.

The last meeting on the pipeline project, involving Iran, Pakistan and India, was held in July 2007.

Foreign secretary Nirupama Rao had recently said Tehran’s importance as an energy partner stemmed from the “natural complementarity between the needs of energy-hungry India, which hopes to grow at a rate of 8-10 per cent in the coming years, and Iran, which is home to the third largest proven oil reserves and second largest gas reserves”.

According to sources, legal experts want the pipeline project to be divided into three separate entities. “This will ensure there is no single ‘Iran gas pipeline project’. Instead, there will be three different national pipelines that will be developed as part of the gas grid and will be coordinated and inter-connected with each other at their respective borders,” sources quoting the legal advisers said.

Experts also suggested that Tehran should consider setting up a trading company in a jurisdiction outside Iran for buying and selling gas, piped through the proposed pipeline, in the global market.

India has been boycotting the talks since 2008 over concerns on safe delivery of gas and frequent changes in the price. New Delhi wants Iran to stick to the price agreed between the two in 2007 and also wants it to be responsible for a safe passage of the gas through Pakistan.

Talks on the 2,300km pipeline started in 1995. Iran and India inked preliminary agreements to transport gas through Pakistan. It was dubbed the “peace pipeline” on hopes that it would improve relations between India and Pakistan.

Around 60 million standard cubic meters a day of gas is likely to flow through the pipeline that may be equally divided between India and Pakistan.