India fears Iran may extract high price for piped gas ANUPAMA AIRY -- Posted online: Friday, January 27, 2006
NEW DELHI, JAN 26: The real issue regarding the price of the piped gas from Iran has finally come to the fore. The petroleum ministry now fears that given the prevailing high oil prices, the issue of gas price may be “extremely difficult to resolve” as Iran can be expected to seek the highest possible price for its gas.
It is not incidental but these concerns come after two years of intense deliberations among the three countries over various issues concerning the multi-billion dollar Iran-Pakistan-India (IPI) gas pipeline project.
“Since the piped gas is expected to be utilised primarily for power projects in north, north-western and central India, an assessment would have to be made about the price that India can afford; taking into account the price of competing energy sources including coal, hydro and nuclear. Petroleum ministry will closely consult the ministry of power in respect of gas price,” says an internal note of the petroleum ministry.
However, before initiating discussions with Iran on the formula relating to the price of gas, the petroleum ministry is planning to approach the Cabinet to seek its directions on an appropriate project structure for executing the IPI pipeline project. The Cabinet’s view would also be sought on the proposed tri-partite government-to-government framework agreement.
The ministry’s note discussed two options as regards the project structure. The first talks about New Delhi’s participation in a corporate structure, which would mean that India would own, build and operate the entire project. Under the second option, gas will be purchased by India at the Pakistan-India border, with the project being implemented in Iran and Pakistan by the two governments concerned (the pipeline will end at the Indian border after which Indian companies will link it with the natural gas grid).
The first option, as per the note, will not only provide for Indian representation at the apex corporate level but will also enable it to monitor all aspects of the project during the planning, construction and operational phases.
“However, Pakistan is expected to balk at the idea of an intrusive Indian presence monitoring activities on its territory. At the same time, Iran is sensitive to the fact that such a major multi-billion dollar project from which US companies would be excluded due to the US Sanctions Act would attract adverse US attention,” the note added.
While the second option was approved in principle by the Cabinet in February last year, a final view has not been taken in this regard as it would appear that this would be the preferred option for Pakistan and Iran.
Thanks for the ping, Humint!
From the looks of this article, I think (hope) India will vote against Iran, if it comes to that. However, there were reports of Bush giving consideration to the Russian plan of enriching uranium for Iran, outside Iran, viz., Russia.
http://timesofindia.indiatimes.com/articleshow/1388251.cms
NEW DELHI: While the domestic political battle over India's vote at IAEA on the Iran issue continued, the government drew comfort from its discussions with top officials of Saudi Arabia.
In their discussions on Wednesday, the Saudi side made it clear to India that it was deeply opposed to Iran going nuclear.
Coming as the Left parties sharpened their claws, it provides a breather to the government, which has declared that it is against the creation of another nuclear weapons power in the neighbourhood.
Saudi Arabia has reason to feel disturbed about Iran's nuclear ambitions, said officials, because this rides on Tehran seeking to assume leadership of the Islamic world, a position Saudi Arabia is reluctant to relinquish.
In this, Saudi interests coincide with those of its other arch enemy Israel - both countries being part of a security compact with the US, which is also pushing for a Security Council criticism of Iran. Saudi Arabia's declared position provides New Delhi with the much needed space.
But just as Iran will be a net loser in a renewed India-Saudi engagement, the other country counting its losses is Pakistan.
It's a clear evidence of a reassessment of Saudi strategic options that Abdullah's first visit as head of the state is to China and India.
Pakistan was not on the original list of destinations but was added after Musharraf invited him during his visit to Mecca OIC summit in December 2005.
Abdullah, the hereditary ruler of Saudi Arabia who carries the somewhat archaic title of king, is making the first break from the past - by telling Pakistan that its relations in South Asia are no longer a zero-sum game.
India and Saudi Arabia will enhance intelligence sharing on terrorism, which cannot be good news in Islamabad.
Other strategic realities have influenced the new Saudi-India relationship - New Delhi's love-fest with Washington has not gone unnoticed in Riyadh.
This, said officials, used to be a barrier to Saudi outreach to India, because of the special relationship Saudi Arabia shares with the US.
Saudi Arabia is less than enthusiastic about the existing India-Iran tango, because its biggest threat in its own region is from Iran.
A nuclear-weapons armed Iran is Saudi Arabia's worst nightmare, a fact that Saudi officials told their Indian counterparts during the delegation-level talks.
For the Indian government, looking for outside endorsement of its vote against Iran at the IAEA, there is no stronger support than from Saudi Arabia.
It's a point government managers are telling Congress and Left politicians pushing the Muslim vote as reason to go soft on Iran.
I found this interesting article.It is a bit old though.
The possibility of finding large reserves of natural gas in the Krishna-Godavari basin and the deep waters of the Andamans has cast its shadow on the proposed Indo-Iran gas pipeline project.
While the government maintains that the project is on and a joint working committee, set up in August 2000, is looking into its various aspects, knowledgeable sources insist that the project may eventually be shelved.
The sources said the country's liquefied natural gas import policy was being reviewed in the light of the new estimates about gas reserves.
And even if India chooses to import LNG from Iran, it is unlikely to invest in a pipeline. This is because some LNG import projects in the country are in a fairly advanced stage of implementation.
"It will be foolhardy to make huge investments in laying a pipeline for the gas that India may not need in the future," the sources said.
They said the latest demand-supply projections showed that the country would have sufficient gas supplies to match the expected 135-140 million standard cubic metres of gas per day (mmscmd) demand in the terminal year (2006-07) of the Tenth Five Year Plan. If more discoveries are made, the country may have a surplus of gas.
Under these circumstances, there may not be any need to import LNG. Thus, if India commits itself to 25-50 years of gas imports through a pipeline, it will not be able to opt out because of certain take-or-pay clauses in the contract.
India's aversion to the idea of piped gas from Iran was obvious at the last meeting of the joint committee in Tehran. The Indian side argued that it could import LNG through means other than a pipeline.
This will not only help the country match gas imports with domestic requirements but also prevent the need for making an additional investment.
However, the Iranians said that LNG could be a complementary mode of transfer of gas and not a competing option vis-a-vis the pipeline.
But Indians were of the view that LNG could be a principal option for transfer of gas from Iran to India and not a complementary option.
AND THANKS FOR THE PING!!!