India, Iran to Hold Gas Pipeline Talks


"The pipeline is back on India's agenda."

The multibillion-dollar Iran-Pakistan-India (IPI) pipeline is back on India's agenda with the government planning to hold a bilateral meeting in Teheran on the issue after a gap of at least two years.

Petroleum Secretary S. Sundareshan said the Iranian government proposed talks on the IPI to which India has agreed. The development comes in the backdrop of India's indication of support for Iran against recent U.S. sanctions.

Some 60 million standard cu. m a day (mmscmd) of gas likely to flow through the pipeline daily may be equally divided between India and Pakistan. The pricing formula for the gas, linked to the Japanese crude cocktail price, is for the gas reaching the Iran-Pakistan border from the source. A further price escalation is expected because of transit rights and transport tariff to be paid to Pakistan by India.

Iran is facing a fresh set of international economic sanctions for refusing to end its nuclear program. Ironically, India, which is heavily dependent on energy imports, last week criticized the "extra-territorial nature" of the censures saying the sanctions would "have a direct and adverse impact on Indian companies" and on India's energy security.

While Iran has the world's second largest oil and natural gas reserves, India is the world's fifth largest energy consumer and imports 75% of its needs, accounting for 3.5% of global energy consumption. The trade between India and Iran is around $15 billion.

Analysts are however, skeptical about the pipeline becoming a reality.

"There are some techno-commercial points that still need to be settled. One is the question of pricing and the second is the question of the physical security of the pipeline," said Uday Bhaskar, security analyst and head of the National Maritime Foundation.

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