Importance of Iran-Pakistan-India pipeline

[Neo]

April 16, 2007

Pakistan and India differ on IPI transit fee

ISLAMABAD, April 15: Pakistan and India are poles apart on the transit fee of the $7.4 billion Iran-Pakistan-India gas pipeline project, a senior official told Dawn.

The two sides were expected to further deliberate on the issue when they would hold a ministerial-level meeting early next month in Islamabad, the official said and added that India still continued to be engaged with the United States on the pipeline issue.

In a background discussion, the official said Pakistan had sought 10 per cent of the gas price on the Pakistan-India border as transit fee to provide right of way, security and safety to the pipeline and also involved taxes and other expenses.

At current oil prices, Pakistan expects transit fee at or around 50 cents per million British Thermal Unit (MMBTU). India is offering 15 cents per MMBTU).

For the argument sake, India is saying Pakistan should seek transit fee only for about 240km portion of the gas pipeline that will specifically be required up to the Indian border. It argues that since about 795km pipeline from the Pakistan-Iran border will also be utilised by Pakistan, there should be no transit fee for this segment.

The official said it was almost certain that the pipeline would enter Pakistan’s off- take point near Hyderabad and it would run about 795km with a diameter of 56 inches through the coastal route. The gas would then flow through a 240km pipeline of 42 inches diameter to reach Indian off-take point of Barmer, making a total of 103kms in Pakistan.

http://www.dawn.com/2007/04/16/top3.htm

 

[Neo]

April 21, 2007
India committed to IPI project: official

ISLAMABAD, April 20: India was fully on board and committed to take part in the $7.4 billion Iran-Pakistan-India gas pipeline project to be started in 2008, a senior government official said on Friday.

"We have been assured by the Indian government that it has no plan to abandon the IPI gas pipeline project under American pressure," Petroleum and Natural Resources Secretary Ahmad Waqar told Dawn on Friday.

“Reports to the contrary that appear occasionally from Indian sources may be attributed to political needs, not real intentions,” he claimed.

"There is no confusion in our mind that India has joined the three-nation gas pipeline project," the secretary petroleum said, adding that during the recent Saarc summit in New Delhi, Prime Minister Shaukat Aziz was assured by his Indian counterpart Dr Manmohan Singh that his country was serious about the project.

Mr Waqar, however, said that Pakistan was pursing both bilateral and tri-lateral approaches to ensure that the project was not abandoned for any reason.

"In the first place, India has assured both Pakistan and Iran that it is very much part of the project, but in case it does not join the project due to any reason, Islamabad and Teheran would complete it," the petroleum secretary said.

The growing energy requirements of India and Pakistan, he said, had forced both the countries to have a certain feasible gas pipeline project.

Mr Waqar said that Economic Coordination Committee of the Cabinet (ECC) had recently approved the gas sharing arrangement with India under the IPI project.

Under the Phase-1 of the project, Iran would deliver about 2.1 billion cubic feet of gas per day (BCFD) at the Pakistan border that would be equally shared by both India and Pakistan.

Under the Phase II, 3.2 BCFD of gas would be transported by Iran, bringing the total gas supplies to 5.3 BCFD from Tehran. Of these supplies, Pakistan and India would get 2.1 BCFD and 3.2 BCFD, respectively, the secretary petroleum said. The petroleum secretary said documentation relating to the project would be finalised next month.

http://www.dawn.com/2007/04/21/top11.htm

 

[niaz]

No one denies the fact that this pipeline is a "Must" but will it really be built??. PA cannot safequard Sui pipeline, Baluchis keep blowing it up at different places virtually non stop. How can Pakistan government guarantee that it can stop this from happening to IPI gas pipeline. Vested interests just wont let it happen, just as they will never let Kala Bagh Dam be built even though we all know that it is a "must ".

I came across some people from Iran during the recent Middle East Petroleum and Gas confernece at the Grand Hyatt in Dubai and they expressed serious doubts. Iran is going ahead with an LNG plant. LNG will allow export of gas to India or Pakistan or any other country in 60/70 thousand ton lots, this is just like crude or other petroleum products. When gassified, LNG expands 600 times ( 1 barrel of LNG equals 600 barrels of gas). In view of the law and order situation in Baluchistan, perhaps this is the way forward. Even though more expensive, initial investment is a lot less.

 

[Contrarian]

No niaz sir,

in LNG initial investment is a lot, and a regassification plant has to be setup where the LNG is exported as well. The trasit route is via ships normally.

 

[Neo]

Iran says India should pay more for LNG contract
Tehran , April 22, 2007

India should increase its offered price to secure a major contract for liquefied natural gas (LNG) deliveries signed two years ago, a senior Iranian oil official was quoted as saying on Sunday.

India in June 2005 signed a deal with Iran to import 5 million tonnes of LNG annually over 25 years from 2009, with an option to buy an additional 2.5 million tonnes a year, to help tie up supplies for the energy-starved nation.

Iran in May last year told New Delhi that its Supreme Economic Council had not approved the deal, priced at $3.25 per million British thermal units, after a sharp rise in oil prices, and said it was demanding more.

Indian Oil Minister Murli Deora said in January his country was willing to pay a higher price for extra LNG quantities from Iran if the Islamic Republic honoured the existing contract for five million tonnes.

But Nosratollah Seifi, head of the National Iranian Gas Export Company (NIGEC), suggested this was not enough. "We have told the Indian side that if they have a serious desire for this contract, they have to suggest a proper price in negotiations because their current price is low," he said.

"The Indian side has given its suggestions a number of times but has not announced its official view," he added.

LNG is gas frozen to liquid for transport in special tankers, avoiding the need for pipelines.

India is also considering a proposed $7 billion gas pipeline from Iran via Pakistan.

http://www.hindustantimes.com/StoryPage/StoryPage.aspx?id=6d1bf79f-32f1-432b-950d-614937407fff&

 

[niaz]

No niaz sir,

in LNG initial investment is a lot, and a regassification plant has to be setup where the LNG is exported as well. The trasit route is via ships normally.

I meant that investment in the re-gassification plant is a lot less than the investemnt in the gas pipline. I came across a feasibility study for a 2-million ton ( 40,000 barrels per day of oil equivalent) per annum LNG receiving terminal including a regassification plant for Jamaica Power, the cost was approx $250-million. Facilities for a very large cold storage was a bye-product. IPI gas pipeline is expected to cost $7-billion for a 200,000 barrels per day oil equivalent. However if you add investemnt in the Liquification plant, ships required for transportation and regassification. LNG route is more expensive compared to overland pipeline.

Advantage of LNG is that once liquified it does not require additional cooling to keep it in liquid form. A very small evaporation( breathing) allowed in the storage tank construction ensures "self cooling". LNG is of course transported in ships just like other petroleum products, thus provides an alternate to
a pipeline. In Canada I came across retail oulets which pump LNG directly into the trucks/busses just as it is done for CNG in India.

However gas pumped via pipeline is the cheapest means of transportaion of natural gas over long distances overland. Russia supplies gas to all of the Eastern Europe and half of the Western Europe thru thousands of kilometers of pipeline.

 

[Neo]

Thursday, May 03, 2007

How real is the Iranian pipeline?

Mr Praful Patel, a vice-president of the World Bank, said in Islamabad the other day that the World Bank is ready to fund the proposed $7.2 billion Iran-Pakistan-India (IPI) gas pipeline project. Although Pakistan has not approached the Bank for any such project loan, he said, the Bank would seriously consider any such request. He regretted that Pakistan has missed out on water conservation and hydroelectricity and now has to rely on imported gas for energy needs. Mr Patel also referred to another pipeline about which Pakistan started dreaming in the 1990s — the Turkmenistan-Afghanistan-Pakistan (TAP) — and expressed the Bank’s willingness to finance it too. Mr Patel said that in the event of the materialisation of the IPI gas pipeline, Pakistan would also get an annual transit fee from India, which would play a pivotal role in strengthening its economy, and that the “IPI gas pipeline project is a win-win situation for Pakistan and India”.

This is a very upbeat message from the World Bank. We know that the United States has placed sanctions on Iran, with a ceiling of $40 million for any company investing there. But Pakistan expects that the US will not include any investment in Pakistan on the Iranian pipeline as being within the ambit of its sanctions and therefore not sanction companies willing to work here. The US Congress is already hearing cases against American companies that trade “indirectly” with Iran despite the sanctions. If the US vetoes it at the Board of Directors’ meeting, the World Bank may not fund the Pakistani part of the IPI.

India, too, has had its bouts of uncertainty about the IPI. It fired its first minister for oil and gas, Mani Shankar Ayer, because he was too enthusiastic about the pipeline and did not pay much heed to the US-India nuclear deal which was in the offing. The nuclear deal with the US went into the doldrums for a while, which probably allowed India to sound enthusiastic about the pipeline again. But India’s negotiating tactics with Pakistan over the transit fee have sometimes pointed to possible delaying tactics. Now the news is that the US and India may break the deadlock over their nuclear treaty.

There have been missteps in the tripartite contacts over the project. Pakistan, which sells its domestic gas at one-third the international price, was daunted by the price quoted by Iran for its Pars gas. The world was already on notice on the rising price of gas, but the news got to Pakistan and India. Late in the day. India characteristically sought to drive a tough bargain and Pakistan went along. After years of bargaining, now both agree that the BTU price of Iranian gas would be equivalent to the price of oil, at $60 per barrel. The same sort of battle was fought by India and Pakistan over the transit fee.

When President Pervez Musharraf first talked publicly about the “fee” that will accrue to Pakistan, someone in Islamabad had fed him an exaggerated figure. He spoke of $700 million annually, almost equal to the assistance Pakistan gets from the United States these days. Realism dawned only after listening to the Indian response. After many months of wrangling and tough Indian bargaining, it is now not even $150 million. The pipeline through Pakistan will be almost a thousand km long and will require constant security and maintenance.

The latest news is that Pakistan has given ground on its earlier proposed rent on the pipeline. It has climbed down from $1.57 per million British thermal units (BTU) to $0.70-0.75 per million BTU as transportation tariff. But India wants the three-quarters of a dollar rent reduced to just half a dollar. It is obvious that India drives the bargain keeping in mind Pakistan’s own need for the pipeline. On the other hand, Pakistan is aware of the real cost of laying the pipeline (which will have to be underground, and therefore very expensive, if it is to be secured against the Baloch nationalists) and then looking after it with at least three new cantonments along the route.

Still, there is many a slip. The TAP project, which was to run through Afghanistan, looked even more feasible than IPI. Among all the parties which de-linked themselves from it, Pakistan stuck to it the longest and gave up only when its pursuit of “strategic depth” came to grief in 2001. As long as the war in Afghanistan continues, reference to TAP is misguided. Will the Iranian pipeline meet the same fate? There are three risky factors that might scuttle it. There is Iran under Mr Ahmadinejad which might be attacked by the US; there is the age-old lack of trust between India and Pakistan, who might not accept becoming interdependent; and there is the Baloch nationalist who will keep blowing up the pipeline until he is given a stake in the fruits of its development.

Let us be honest. Pakistan needs to have the pipeline most. It is only later that it becomes important for Iran and India. Once built, it will provide for the economic development and transformation of South Asia as well as give a new identity to the isolated state of Iran. *

http://www.dailytimes.com.pk/default.asp?page=2007\05\03\story_3-5-2007_pg3_1

 

[Neo]

India and Pakistan plan gas pipeline
May 28, 2007

TEHRAN, May 28 (UPI) -- India and Pakistan are working on an agreement to export natural gas from Iran despite U.S. pressure to suspend negotiations.
The three nations will hold a new round of talks in Tehran next week on construction of a gas pipeline, the Islamic Republic News Agency reports.

Pakistan President Parviz Musharraf has said repeatedly that a natural gas pipeline will be constructed at any cost and Islamabad won't tolerate any pressure to abandon the project.

According to IRNA, Iran's oil minister has said U.S. sanctions won't have any effect on the agreement between the three nations.

The final date for agreement has been set at July 30.

http://www.washingtontimes.com/upi/20070528-111522-4569