Iran gas: China waits as India
wavers By Siddharth Srivastava
NEW DELHI - China is emerging as a
potential partner in the proposed multi-billion
dollar, 2,700-kilometer gas pipeline originally
intended to link Iran, Pakistan and India.
Washington, at odds with Iran because of
its perceived pursuit of nuclear weapons, has been
hostile to the US$7.5 billion IPI pipeline and has
urged India, considered a new strategic South
Asian ally, not to go ahead with the project.
China, always on the lookout for new
energy sources, has conveyed to Pakistan it would
be willing to import 1.05 billion cubic feet (bcf)
of gas per day if India opts out of the project,
according to reports quoting officials in
Islamabad.
Pakistan, which is smarting
under Washington's decision to
offer
a
nuclear-technology agreement to India but deny a
similar deal to Pakistan, plans to import 2.2 bcf
of gas a day from Iran through the pipeline.
Last
month, a Pakistan Foreign Office spokesman said,
"If there are prospects of China joining the IPI
project with or without India,
we
will welcome it. Pakistan is committed to the
pipeline because of its desire to achieve energy
security."
In similar vein, an Iranian
Foreign Ministry spokesperson said in Tehran,
"Other countries are eager for implementation of
the [IPI] project. China is putting pressure that
she wants to join the project. We don't have a lot
of time. It is time to expedite the
decision-making."
New Delhi is not taking
the "China threat" very seriously, at least for
now, with part of the argument being that India
will pay more for the gas. An Indian official at
the Petroleum Ministry said, "Going by China's
past record, it is unlikely that Beijing will pay
as much as Iran is likely to get out of India."
The official said Iran and Pakistan had
"deliberately" introduced China as a possible
party in the IPI to "pressurize" India, as it
would be "politically unwise for India to let
China walk away with the extra gas as has happened
in Myanmar".
A gas purchase agreement has
been finalized by Islamabad and Tehran that will
be formally signed this month, while India has
kept away from recent talks, citing various
reasons, including political instability in
Pakistan.
Speaking in Parliament recently,
India's Petroleum Minister Murli Deora said, "No
official communication has been received regarding
China joining the IPI gas pipeline project. Such
multilateral projects involve protracted
discussions as all the aspects have to be
carefully examined."
While Pakistan and
Iran remain keen to move ahead with the project,
it does seem that Tehran and perhaps even
Islamabad would prefer India rather than China on
board because China is unlikely to pay the kind of
price that India would for the gas. This is a
matter that will pinch Iran the most.
China, for example, has reportedly paid a
third of the price India agreed to to import
similar armaments from Israel.
Iran's
Foreign Ministry has denied reports that the
tripartite talks over the IPI pipeline have
collapsed. "All three countries [India, Iran and
Pakistan] believe that this project will provide
stability and security to the region. There is a
serious will and determination to realize this
project," a statement recently said.
Over
the past couple of years, India, Pakistan and Iran
have mutually agreed to a price of US$4.93 per
million British thermal units (mBtu), an industry
measure, for the gas from Iran, which many
observers feel is not the kind of money Beijing
will settle for. This price was negotiated
when crude oil was $60 a barrel. It is now trading
in the $100 a barrel range.
India will
also have to pay Pakistan a transit and
transportation fee, which should raise the price
at the India-Pakistan border to about $7 per mBtu,
a price much higher than domestically available
gas.
Iran, which possesses the world's
second-largest gas reserves after Russia, has
completed nearly 20% of the work on the pipeline,
which will supply gas from the South Pars fields
up to the Iran-Pakistan border. Pakistan is yet to
begin work on a 1,000-km stretch of the pipeline
to link Iran with India.
In the event that
China joins the project, the pipeline would run
via Gilgit in Pakistan's Northern Areas, which is
very difficult terrain. Pakistan, which has
already approved a Karakoram highway project in
the same location, is also looking to extend a
railway link to China to connect with Gwadar port
in Balochistan province, in the south.
New
Delhi has been concerned about issues related to
safety, commercial viability and security of the
IPI pipeline and has thus been promoting
involvement of independent monitors as well as the
Russian firm Gazprom as an investor in the
project.
Given its suspicions regarding
its neighbor, India does not want Pakistan to be
the only stakeholder in the transit section of the
pipeline. According to some Indian analysts and
officials, India is looking to have a deeper
interest in the IPI project rather than being a
mere beneficiary of the gas. Nor does it want
future supplies of gas to be held to ransom by
Pakistan. Security and consistent supplies over
the next 25 years are major issues.
However, it is also apparent that New
Delhi is keen not to annoy Washington in the
immediate future, even as Indian officials say it
is political uncertainty in Pakistan (elections
were held last month and followed the
assassination of former prime minister Benazir
Bhutto) that is causing delays in the IPI project.
Analysts and officials admit this is just
an alibi to bide time until matters with
Washington - particularly their agreement on
nuclear issues - are sorted. New Delhi's approach
has been to push the civilian India-US nuclear
deal that promises access to foreign technology to
generate nuclear power, before firming up the IPI
project.
The Indian position is eased in
the short term by the fact that the Reliance
Industries-managed Krishna-Godavari gas fields in
the east of the country are set to be productive
from this year, pointing to no acute gas shortages
in the near future.
Over the longer term,
however, India will need access to new energy
resources to sustain its growing and modernizing
economy. Whether Iran will be a key source will
hinge on settlement of numerous issues related to
sanctions on that country, internal and external
politics, geostrategy and security and
construction problems.
Some analysts say
Iran is unlikely to become a major exporter of gas
for more than a decade, given the tough attitude
of Western countries, especially the US, which has
threatened sanctions against any nation dealing
with Tehran.
Siddharth
Srivastava is a New Delhi-based
journalist.
(Copyright 2008 Asia Times
Online Ltd. All rights reserved. Please contact us
about sales, syndication and republishing .)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
we
will welcome it. Pakistan is committed to the
pipeline because of its desire to achieve energy
security." 
