Iran rethinks gas supply security for India

Stepping down from its earlier stand that it would “seek to establish a trilateral mechanism to reaching an agreement...

Written by Amitav Ranjan | New Delhi | Published: February 16, 2009 1:17:53 am

Stepping down from its earlier stand that it would “seek to establish a trilateral mechanism to reaching an agreement with the aim of securing the delivery of gas at Pakistan-India border”,Iran now says the only gas supply security it is willing to give India is reducing total supply to the extent Pakistan denies India through the IPI pipeline.

“For providing comfort to India in terms of security and supply concerns,Iran has suggested to Pakistan to include a specific provision in the Gas Sale & Purchase Agreement which would enable Iran to deny Pakistan the exact amount of gas that it would stop from delivery to India,” the Indian Ambassador to Iran conveyed last month after a meeting with H Ghanimi Fard,the National Iranian Oil Company’s Vice-President for Investment Affairs.

For example,if Pakistan were not to supply 30 million out of the total 60 million cubic metres of gas that would flow every day through the pipeline,Iran would lower the total supply in the pipeline to 30 million cubic metres,earmarked as Pakistan’s share.

Dr Fard was briefing the Indian diplomat after a meeting on January 14 with a Pakistani delegation headed by Asim Hussain,Advisor on Petroleum and Natural Gas to Prime Minister Syed Yousuf Raza Gilani.

While keeping mum on the trilateral mechanism,Dr Fard put forward a new pricing formula for the gas to be sold at “Iran-Pakistan” border. India’s demand is that the liability to pay be linked with supply at “India-Pakistan” border so that the onus would be on Iran and Pakistan to ensure India gets the gas. (In the new formula,the price of gas would rise by 12 per cent for every dollar increase in the Japanese Crude Cocktail compared to 6.3 per cent rise in the old formula.)

The other “assurance” that Dr Fard offered was that Iran had “enough leverage” on the Pakistan Government and was therefore “well-placed” to convey India’s concerns on the security of supplies and allied issues.

Dr Fard kept silent on Iran’s earlier assurance to ‘encourage’ Pakistan to involve Indian and Iranian companies in building the Pakistan segment of the pipeline under an integrated project.

Prime Minister Manmohan Singh had requested Iranian President Mahmoud Ahmadinejad last April that supply security be guaranteed to turn the pipeline into a ‘confidence building’ measure. He had suggested penalties for supply disruptions and interlocked investments to reinforce trust and confidence in the project.

Though Dr Fard told the Indian Ambassador that his Government was “practically inflexible” on the price,he suggested further talks with a visit by Petroleum Minister Murli Deora for a “trilateral meeting or in view of current state of India-Pakistan relations,even for a bilateral meeting”.

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