The Hindu Business Line : Gas realities

IN FEBRUARY, THE US Ambassador in New Delhi, Mr David Mulford, had met the Petroleum Minister, Mr Mani Shankar Aiyar, to convey Washington's reservations on the proposed Iran-Pakistan-India gas pipeline deal. The ground on which the Americans opposed the deal was that it would contravene the US Iran-Libya Sanctions Act which, among other things, empowers the US President to order punitive measures against any international company that invests more than $20 million a year in the Iranian energy sector. (The project entails the building of a $4.16-billion overland gas pipeline from the South Pars oilfield in Iran through Pakistan up to the Indian border.)

Clearly, New Delhi is within its rights to describe this policy stance — reiterated by the US Secretary of State, Ms Condoleeza Rice, during her recent, maiden visit to the Capital — as unwarranted because it represents nothing but interference in India's sovereign affairs. In fact, Washington seems mindful of this line of thinking, especially now when relations between the two countries are said to have entered a "mature stage". The message being sent out, therefore, is that the US would not really mind (even if it made the usual noises) if the project went through.

Indeed, Washington is not enamoured of Yangon and yet its opposition (if any) to the proposed Myanmar-Bangladesh-India gas pipeline has been minimal. A similar point can be made regarding the India-Iran agreement signed in January on the sale of 7.5 million tonnes of LNG a year to India over the next 25 years and Indian participation in developing Iranian oilfields and extracting some 100,000 barrels of oil a day from them. This apart, Indian oil PSUs are engaging themselves in Libya which, again, cannot be to the liking of the Americans, not to speak of the nascent efforts at India-China cooperation in oil exploration and production.

Yet the US stand on the India-Iran gas pipeline project may not be the only threat to it. In fact, if present developments are any indication, it would appear that the project is under threat from the postures being adopted by the players themselves, notably Teheran. Comfortingly, for this project at least, both Islamabad and New Delhi seem to have overcome the problems arising out of the tension that mark their mutual relationship, with Pakistan (as of now) not objecting to the Indian position that Iran will be totally responsible for transporting the gas to India. Teheran, too, accepted this position, but it is totally inexplicable that it has suddenly insisted on rejecting the normal "supply or pay" stipulation associated with such deals, at the same time insisting that India follow the "take-or-pay" norm which, to say the least, is lopsided and unfair. This apart there is also a pricing problem about which Mr Aiyar made public reference on Wednesday. The Minister has done well to take a firm stand on these issues. The point must be driven home to Iran that ultimately, the project will be acceptable to Indians only if it yields an appreciable economic benefit.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Gas realities

The softest pillow is a clear conscience

Budget: Illusory gains for pensioners

No such thing as free lunch

Sustaining export growth — Leverage on external opportunities

Draft Condi, draft Hillary!

Pension schemes

Budget rollbacks

Cash transaction tax