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RadioFreeEurope/RadioLiberty, Czech Republic
July 30 2005
Iran: Tehran Struggles To Push Ahead With India Pipeline
By Bill Samii
Officials in Iran are eager to get under way with a proposed gas
pipeline to Pakistan and India that has been the subject of talks for
more than a decade. Initial discussions among the participating
countries concerning a 2,600-kilometer, overland natural-gas pipeline
from Iran through Pakistan to India began in the early 1990s.
Iran sits on the world's second-largest natural-gas reserves -- an
estimated 26.6 trillion cubic meters, according to the U.S. Energy
Information Administration.
Work on the project has yet to commence, however, and mid-July
statements from Indian officials cast doubt on the deal, particularly
in light of Washington's recent agreement to cooperate with the
Indian nuclear program.
New Delhi Expresses Doubts
India is a huge and growing natural-gas market, with consumption
nearly 25 billion cubic meters in 2002 and projected to reach 34
billion cubic meters in 2010 and 45.3 billion cubic meters in 2015.
With its increasing energy requirements, India has entered
discussions about pipeline construction with Bangladesh, Iran,
Myanmar (Burma), and Qatar. Recent meetings among officials from
India, Iran, and Pakistan suggested that the pipeline project
connecting the three countries would get under way in the near future
despite pricing disagreements (see "RFE/RL Iran Report," 7 March and
23 March 2005).
Indian officials recently stressed their eagerness to go ahead with
the Iranian pipeline project. Indian Petroleum Minister Mani Shankar
Aiyar said in Lahore on 4 June that India would not give in to U.S.
pressure to abandon the project because of concerns that Iran might
use the revenues to develop nuclear or other banned weapons, Press
Trust of India (PTI) reported. The next day, Aiyar was in Pakistan
for talks with his counterpart, Amanullah Khan Jadoon.
The two sides created a Joint Working Group to accelerate work on the
pipeline. Diplomats in the Indian capital noted that Iran is absent
from the Joint Working Group, the Hindi "Navbharat Times" reported on
8 June, and they suggested that this was a conscious decision in
order to allay U.S. concerns.
In mid-June, India agreed to purchase $22 billion worth of natural
gas from Iran. Starting in 2009-10, an Indian consortium will
purchase 5 million tons of liquefied natural gas (LNG) annually over
a 25-year period. This was less than the initial agreement, reached
in January, for the purchase of 7.5 million tons.The pipeline project
directly involves Iran, Pakistan, and India, and it has the potential
to improve troubled Islamabad-New Delhi relations. Washington would
welcome such a development, but it is reluctant to see the project go
ahead.
The next month, Pakistani officials were in New Delhi to discuss the
pipeline. Indian Petroleum Minister Aiyar told reporters that the
discussions would address commercial, financial, legal, and technical
issues. According to AFP on 12 July, when asked about Washington's
opposition to the project, Pakistani Oil Secretary Ahmad Waqar said,
"Our president and prime minister have stated on a number of
occasions that we will proceed with this project based on our
national interests."
Given these developments, Indian Prime Minister Manmohan Singh's
announcement on 21 July in Washington that he was unsure whether the
pipeline would get funding might have come as an unpleasant surprise
to observers in Tehran and Islamabad.
"I am realistic enough to realize that there are many risks, because
considering all the uncertainties of the situation there in Iran, I
don't know if any international consortium of bankers would
underwrite this," Singh said, according to the PTI news agency.
Islamabad Is Eager
Talks between Pakistan and Iran in early July also suggested that all
was well.
Iranian Petroleum Minister Bijan Namdar-Zanganeh visited Islamabad
and met with Pakistani Petroleum Minister Jadoon in the first week of
July. The two sides signed a memorandum of understanding that called
for continued discussions, and Namdar-Zanganeh said he hoped a final
agreement would be signed by April. He noted that after 10 years of
talks, this was the first "written document." Namdar-Zanganeh also
met with Prime Minister Pervez Musharraf and Prime Minister Shaukat
Aziz, according to media reports.
Jadoon emphasized that his country would need natural gas for
consumer and industrial consumption by 2010. The country's demand for
natural gas is expected to rise approximately 50 percent by 2006,
according to the EIA. Moreover, gas is expected to become the "fuel
of choice" for electricity-generation projects in the future.
In light of such requirements, and possibly because of the
approximately $600 million in transit fees Pakistan stands to earn,
Islamabad tried to allay concerns prompted by Singh's late-July
comments. Pakistani Foreign Ministry spokesman Muhammad Naim Khan
announced on 25 July that even if India gave in to U.S. pressure,
Islamabad would build a natural-gas pipeline from Iran, AFP reported.
"We would welcome Indian association with this project but if it is
not feasible with India, we are going to go ahead with the project in
any case," Khan said in the Pakistani capital. He said Pakistan
needed the gas.
Pakistani Petroleum Minister Jadoon said in Islamabad on 23 July that
his country could handle all the pipeline security requirements, IRNA
reported. "We, like India, are in need of gas and we know how to take
care of the interstate projects and we are committed to its
security," he said.
"Business Recorder," a Pakistani financial daily, reported on 28 July
that Islamabad had begun a search for investment banks that could
serve as "financial adviser/consultant" for the pipeline. Pakistan
wants to hasten completion of the paperwork for the project, and it
is aiming for a December 2005 deadline. Despite recent cautionary
statements from Indian officials, the Pakistanis believe India's
energy requirements will force the issue. Pakistan is also willing to
pursue the issue bilaterally.
The Nuclear Alternative
The pipeline project directly involves Iran, Pakistan, and India, and
it has the potential to improve troubled Islamabad-New Delhi
relations. Washington would welcome such a development, but it is
reluctant to see the project go ahead. U.S. State Department official
Stephen Rademaker warned that Iran could fund terrorism and weapons
of mass destruction with the money it made from natural-gas sales,
the international edition of "The Wall Street Journal" reported on 24
June. U.S. officials have warned the Indians and Pakistanis that
their companies could be sanctioned if they go ahead with the
project.
If India forsakes natural gas from Iran, then it might have to turn
to nuclear power as an alternative. U.S. President George W. Bush
announced on 18 July that India is "a responsible state" that "should
acquire the same benefits and advantages as other such states,"
ft.com reported. Bush went on to say that he would encourage Congress
to make the legal adjustments necessary for such cooperation with the
Indian nuclear program to take place. In exchange for such
cooperation, India agreed to allow international agencies to oversee
its nuclear program.
Potential Blow To Iran
The collapse of the Indian natural-gas deal would be a sharp blow to
Iran. Such a development could have an impact in three areas. One
possibility is that Iran could try to salvage the deal by offering
India a lower price for its gas. Pricing disagreements were one of
the main sticking points in March.
Another possibility is that Iran's efforts to diversify beyond oil
might collapse. That being said, Armenia and Turkey are already
customers for Iranian gas; Tehran has signed agreements with Oman and
Kuwait; and it has signed gas-related memorandums -- or at least
discussed the topic -- with Austria, Bulgaria, China, Greece, Italy,
South Korea, and Taiwan.
The third possibility, probably much more remote, is that Iran would
renounce activities that concern the international community,
including support for terrorism, interference in neighboring states'
affairs, and the pursuit of weapons of mass destruction.
Failing that, Iran would find it very difficult to compete with the
United States in terms of bargaining power. If the Indian model --
even without nuclear concessions -- were applied successfully in more
cases where Iran was trying to do business with other countries, then
Iran would find itself increasingly isolated.
July 30 2005
Iran: Tehran Struggles To Push Ahead With India Pipeline
By Bill Samii
Officials in Iran are eager to get under way with a proposed gas
pipeline to Pakistan and India that has been the subject of talks for
more than a decade. Initial discussions among the participating
countries concerning a 2,600-kilometer, overland natural-gas pipeline
from Iran through Pakistan to India began in the early 1990s.
Iran sits on the world's second-largest natural-gas reserves -- an
estimated 26.6 trillion cubic meters, according to the U.S. Energy
Information Administration.
Work on the project has yet to commence, however, and mid-July
statements from Indian officials cast doubt on the deal, particularly
in light of Washington's recent agreement to cooperate with the
Indian nuclear program.
New Delhi Expresses Doubts
India is a huge and growing natural-gas market, with consumption
nearly 25 billion cubic meters in 2002 and projected to reach 34
billion cubic meters in 2010 and 45.3 billion cubic meters in 2015.
With its increasing energy requirements, India has entered
discussions about pipeline construction with Bangladesh, Iran,
Myanmar (Burma), and Qatar. Recent meetings among officials from
India, Iran, and Pakistan suggested that the pipeline project
connecting the three countries would get under way in the near future
despite pricing disagreements (see "RFE/RL Iran Report," 7 March and
23 March 2005).
Indian officials recently stressed their eagerness to go ahead with
the Iranian pipeline project. Indian Petroleum Minister Mani Shankar
Aiyar said in Lahore on 4 June that India would not give in to U.S.
pressure to abandon the project because of concerns that Iran might
use the revenues to develop nuclear or other banned weapons, Press
Trust of India (PTI) reported. The next day, Aiyar was in Pakistan
for talks with his counterpart, Amanullah Khan Jadoon.
The two sides created a Joint Working Group to accelerate work on the
pipeline. Diplomats in the Indian capital noted that Iran is absent
from the Joint Working Group, the Hindi "Navbharat Times" reported on
8 June, and they suggested that this was a conscious decision in
order to allay U.S. concerns.
In mid-June, India agreed to purchase $22 billion worth of natural
gas from Iran. Starting in 2009-10, an Indian consortium will
purchase 5 million tons of liquefied natural gas (LNG) annually over
a 25-year period. This was less than the initial agreement, reached
in January, for the purchase of 7.5 million tons.The pipeline project
directly involves Iran, Pakistan, and India, and it has the potential
to improve troubled Islamabad-New Delhi relations. Washington would
welcome such a development, but it is reluctant to see the project go
ahead.
The next month, Pakistani officials were in New Delhi to discuss the
pipeline. Indian Petroleum Minister Aiyar told reporters that the
discussions would address commercial, financial, legal, and technical
issues. According to AFP on 12 July, when asked about Washington's
opposition to the project, Pakistani Oil Secretary Ahmad Waqar said,
"Our president and prime minister have stated on a number of
occasions that we will proceed with this project based on our
national interests."
Given these developments, Indian Prime Minister Manmohan Singh's
announcement on 21 July in Washington that he was unsure whether the
pipeline would get funding might have come as an unpleasant surprise
to observers in Tehran and Islamabad.
"I am realistic enough to realize that there are many risks, because
considering all the uncertainties of the situation there in Iran, I
don't know if any international consortium of bankers would
underwrite this," Singh said, according to the PTI news agency.
Islamabad Is Eager
Talks between Pakistan and Iran in early July also suggested that all
was well.
Iranian Petroleum Minister Bijan Namdar-Zanganeh visited Islamabad
and met with Pakistani Petroleum Minister Jadoon in the first week of
July. The two sides signed a memorandum of understanding that called
for continued discussions, and Namdar-Zanganeh said he hoped a final
agreement would be signed by April. He noted that after 10 years of
talks, this was the first "written document." Namdar-Zanganeh also
met with Prime Minister Pervez Musharraf and Prime Minister Shaukat
Aziz, according to media reports.
Jadoon emphasized that his country would need natural gas for
consumer and industrial consumption by 2010. The country's demand for
natural gas is expected to rise approximately 50 percent by 2006,
according to the EIA. Moreover, gas is expected to become the "fuel
of choice" for electricity-generation projects in the future.
In light of such requirements, and possibly because of the
approximately $600 million in transit fees Pakistan stands to earn,
Islamabad tried to allay concerns prompted by Singh's late-July
comments. Pakistani Foreign Ministry spokesman Muhammad Naim Khan
announced on 25 July that even if India gave in to U.S. pressure,
Islamabad would build a natural-gas pipeline from Iran, AFP reported.
"We would welcome Indian association with this project but if it is
not feasible with India, we are going to go ahead with the project in
any case," Khan said in the Pakistani capital. He said Pakistan
needed the gas.
Pakistani Petroleum Minister Jadoon said in Islamabad on 23 July that
his country could handle all the pipeline security requirements, IRNA
reported. "We, like India, are in need of gas and we know how to take
care of the interstate projects and we are committed to its
security," he said.
"Business Recorder," a Pakistani financial daily, reported on 28 July
that Islamabad had begun a search for investment banks that could
serve as "financial adviser/consultant" for the pipeline. Pakistan
wants to hasten completion of the paperwork for the project, and it
is aiming for a December 2005 deadline. Despite recent cautionary
statements from Indian officials, the Pakistanis believe India's
energy requirements will force the issue. Pakistan is also willing to
pursue the issue bilaterally.
The Nuclear Alternative
The pipeline project directly involves Iran, Pakistan, and India, and
it has the potential to improve troubled Islamabad-New Delhi
relations. Washington would welcome such a development, but it is
reluctant to see the project go ahead. U.S. State Department official
Stephen Rademaker warned that Iran could fund terrorism and weapons
of mass destruction with the money it made from natural-gas sales,
the international edition of "The Wall Street Journal" reported on 24
June. U.S. officials have warned the Indians and Pakistanis that
their companies could be sanctioned if they go ahead with the
project.
If India forsakes natural gas from Iran, then it might have to turn
to nuclear power as an alternative. U.S. President George W. Bush
announced on 18 July that India is "a responsible state" that "should
acquire the same benefits and advantages as other such states,"
ft.com reported. Bush went on to say that he would encourage Congress
to make the legal adjustments necessary for such cooperation with the
Indian nuclear program to take place. In exchange for such
cooperation, India agreed to allow international agencies to oversee
its nuclear program.
Potential Blow To Iran
The collapse of the Indian natural-gas deal would be a sharp blow to
Iran. Such a development could have an impact in three areas. One
possibility is that Iran could try to salvage the deal by offering
India a lower price for its gas. Pricing disagreements were one of
the main sticking points in March.
Another possibility is that Iran's efforts to diversify beyond oil
might collapse. That being said, Armenia and Turkey are already
customers for Iranian gas; Tehran has signed agreements with Oman and
Kuwait; and it has signed gas-related memorandums -- or at least
discussed the topic -- with Austria, Bulgaria, China, Greece, Italy,
South Korea, and Taiwan.
The third possibility, probably much more remote, is that Iran would
renounce activities that concern the international community,
including support for terrorism, interference in neighboring states'
affairs, and the pursuit of weapons of mass destruction.
Failing that, Iran would find it very difficult to compete with the
United States in terms of bargaining power. If the Indian model --
even without nuclear concessions -- were applied successfully in more
cases where Iran was trying to do business with other countries, then
Iran would find itself increasingly isolated.