Iran, Pakistan dump India on pipeline

Apparently, Iran and Pakistan have combined together to dump India on the proposed 2,7000 kilometer gas pipeline that was to bring gas to India to meet its industrial and energy demands. Both the countries have decided to sell the surplus gas to China rather than to India. But sources say that in view of India’s reluctance to deal with Iran due to American pressure that country had no choice but to administer a snub.

by  reporter@dayafterindia.com

Even as New Delhi grapples with domestic leftwing opposition to the India-United States civilian nuclear deal, Iran and Pakistan

have finalized their section of a US$7.5 billion gas pipeline that Washington opposes.

India, Pakistan and Iran are the original partners of the 2,700-kilometer IPI “peace” pipeline that they wanted to complete by 2012 to transfer Iranian natural gas from its South Pars field to India via Pakistan. But, it is apparent now that New Delhi has been dumped, for the time being at least.

Last week, Iran’s deputy minister in charge of the pipeline, Hojatollah Ganimifard, was quoted by the Iranian Oil Ministry’s news service Shana as saying, “The content of the peace pipeline contract has been finalized and all the points prepared by the two sides’ legal experts have been re-read and agreed by the two sides [Iran and Pakistan].” He said the two sides would ink the contract in December “without a third partner”.

And then, Mokhtar Ahmad, advisor to Pakistani Prime Minister Shaukat Aziz, was quoted as saying, “As we expected, the text of the peace pipeline has been made ready for the signing by the two states’ heads.” Pakistan said that any excess gas that would have been destined for India could be transferred to China.

Both Tehran and Islamabad have blamed India of delaying progress of the IPI at the behest of Washington, which does not want nations to deal with Iran due to its bid to pursue an independent nuclear program. Among the issues that New Delhi has raised on the IPI include security guarantees, transit fees it must pay to Pakistan and a price revision clause on which Tehran insists. New Delhi also did not take part in what was meant to be a tripartite conference in Tehran, saying that it needed to sort out bilateral issues with Pakistan first.

There is a thought that New Delhi feels it can afford to let the IPI slip due to the discovery of huge gas reserves on India’s eastern coast, the Krishna-Godavari basin, that private sector behemoth Reliance Industries plans to begin selling soon. New Delhi has also been unhappy with Tehran reopening price negotiations to a separate liquefied natural gas (LNG) deal signed earlier. India has been looking at Qatar, Algeria and Russia instead to serve its LNG needs.

As an alternative, India is also seriously looking at the prospects of taking natural gas from Turkmenistan via Afghanistan and Pakistan, due to the heavy doses of tax breaks that have been proposed to push this $3.5 billion pipeline project that is supported by the US.

Although publicly New Delhi has maintained that it stands by the IPI pipeline, the reality is going to be different. “The final deal [on IPI] is not going to happen in the near future as the project is no longer just about energy security, it’s more about India’s strategic position in the global community,” said a Foreign Ministry official on condition of anonymity.

“The project is in the radar of the Prime Minister’s Office and unless there is a clear signal from there, it is unlikely that India’s Petroleum Ministry will agree to any final arrangement,” he added. US Treasury Secretary Henry Paulson, during a recent visit to India, is believed to have recommended that Delhi not go ahead with the project. And subsequently Treasury Under Secretary for International Affairs David McCormick told reporters that the US hoped India would not move forward with the pipeline. He said “it would not be the right path during a time the world should be imposing greater discipline on its interactions with Iran”. He added that India should meet its energy needs through the nuclear deal with the US that is now stalled in the Indian Parliament.

There are official and media indications that progress in India-Russia nuclear cooperation has also been deliberately delayed, as New Delhi does not want to upset the US. It was expected that the highlight of Indian Prime Minister Manmohan Singh’s visit to Russia this week would be a far-reaching civilian nuclear agreement, with Moscow to help India build four reactors to produce electricity. But the deal has been deferred as Washington apparently would not have stood for India deepening its nuclear engagement with Russia at a time when the India-US nuclear pact is stalled. If ratified by India and then by the international Nuclear Suppliers’ Group (NSG), the latter agreement will allow US companies lucrative access to India’s civilian nuclear development programs. India’s official stand is that the NSG still has to debate India’s global nuclear status, but this has not prevented New Delhi from dealing with Russia on nuclear matters in the past.

Meanwhile, Washington has also made it clear that Indian private sector major Essar Steel’s plans to enter the US’s iron and steel sector with a $1.6 billion steel plant in Minnesota will be stymied if the company goes ahead with building a refinery in Iran.

Recently, pension funds from the US, including Calpers (California Public Employees’ Retirement System), wrote to global oil companies, including Indian state-explorer Oil and Natural Gas Corporation and the Essar Group, cautioning them about investing in Iran.

The funds have indicated that future international sanctions may jeopardize such operations involving Iran, which is an indicator of stronger US action in the pipeline against Iran.