Gas pipeline tops Iran-India agenda

Gas pipeline tops Iran-India agenda

By Anna Fifield and Najmeh Bozorgmehr in Tehran and Farhan Bokhari in Islamabad

Published: April 28 2008 19:22 | Last updated: April 28 2008 19:22

The proposed $7.6bn gas pipeline from Iran to India will be at the centre of discussions between the two countries’ leaders on Tuesday, as they meet to strengthen their economic relations at a time when New Delhi needs energy and Tehran needs allies.

The talks, coming during Iranian President Mahmoud Ahmadi-Nejad’s whistle-stop visit to India, will probably irritate Washington as it seeks to isolate Tehran from the international community over its nuclear programme.

Mr Ahmadi-Nejad and India’s Prime Minister Manmohan Singh are expected to discuss ways to kick-start work on the 2,600km pipeline, which is set to provide India and Pakistan with 60m cu m of gas a day initially, eventually rising to 150m cu m a day.

The project has been under discussion since 1994 but has been bedevilled by delays, most recently because of disagreements between India and Pakistan over transit fees. However, hopes for the pipeline project were revived on Friday when Indian and Pakistani petroleum ministers said they were as little as weeks away from agreeing terms.

A senior Pakistani official on Monday said President Pervez Musharraf had asked his Iranian counterpart to host a meeting of foreign ministers from India, Pakistan and Iran by the end June to sign a pipeline deal formally.

Growing support for the pipeline in New Delhi comes as hopes are fading for a historic nuclear power agreement between India and the US that has been blocked by the government’s communist allies.

A pipeline deal will complicate future attempts to resurrect the nuclear agreement. The US-India Peaceful Atomic Energy Co-operation Act, which enabled Washington to conclude the nuclear co-operation agreement with India last year, demanded that the Bush administration report back to Congress on Indian efforts to “isolate, and, if necessary, sanction and contain” Iran.

India, which imports about 70 per cent of its oil and gas, is looking for new sources of long-term energy supplies to fuel its booming economy. Meanwhile Iran, which holds the world’s second largest oil and gas reserves, is desperately in need of both investment and international support as United Nations sanctions bite.

The Bush administration has opposed the project, with the US State Department last week suggesting that New Dehli should put pressure on Tehran over the nuclear issue and thereby “become a more responsible actor on the world stage”. India responded that it did not need “any guidance on the future conduct of bilateral relations”.

Hojatullah Ghanimi Fard, the National Iranian Oil Company official overseeing the pipeline, said energy needs took priority over politics.

“We cannot say that the US likes this pipeline being in place, but at the same time these countries are not prepared to sacrifice their energy supplies,” Mr Ghanimi Fard said. “They have to diversify energy, not just source but also type of energy used.”

A senior western diplomat in Islamabad said both Pakistan and India could gain hugely from this project. “Both of these countries have increasing energy needs, and a point will come when the US would not be in a position to block this project,” he said.

Mr Ahmadi-Nejad and Mr Singh are due to discuss broader energy deals and investment opportunities during their talks. India is expected to try to revive a languishing 25-year, $25bn (€16bn, £12.5bn) deal that would supply India with 5m tonnes a year of liquefied natural gas.