The 15-year-old Iran-Pakistan-India (IPI) pipeline project is finally seeing some progress with the three countries agreeing on the price of gas and India and Pakistan agreeing on the transportation tariff that will be charged on the gas passing through Pakistan.
However, the parties now have to deal with a new issue, of Iran asking for a price revision clause in the contract, which again raised questions about the deal coming through. Speaking to Rakteem Katakey, Iran's Energy and Economic Counsellor in India Ainollah Souri says that Iran will send its gas all over the world, and it is up to India to decide whether it wants a share of it.
Starting with the question on everyone's minds, is India finally going to get gas from Iran?
Why not? Iran has the second largest reserves of gas in the world, and India needs gas. There is a look-east policy in Iran -- gas from Iran is definitely coming to the east. It can go anywhere. Accordingly, India can be one of the receivers in the east. India has a strong desire to have Iranian gas. This has come to the fore from the protracted negotiations that have taken place among the three countries.
So according to you, the IPI pipeline is happening. The industry and certain sections of the government think the deal will not come through.
The pipeline deal is going ahead as far as Iran, India and Pakistan are concerned. Both India and Pakistan have agreed in-principle to the price revision that we have suggested. However, there are a few issues that have to be settled, and I am sure they will be soon.
The Indian petroleum minister, Murli Deora, is meeting his Pakistani counterpart later this month, and we have got indications that the issue of transit fee on the gas will be settled then. That will be a significant step towards the final pipeline deal.
There are concerns about Iran's commitment to contracts -- India is yet to get the LNG for which a contract was signed two years ago?
The LNG deal and the pipeline deal are separate
Why is Iran insisting on a gas price revision every three years?
Every long-term gas contract has a price revision clause, and they are all for three years. We are a gas producing country, yet we buy gas from Turkmenistan and that contract has a three-year price revision clause.
Russia and Ukraine have a long term gas contract, and till the price revision clause was introduced in the contract there were continuous problems with the delivery of gas. The price revision clause is simply a mechanism to study the market realities after a specified period. It is to the benefit of the buyer and the seller. It also helps maintain the sanctity of a contract which is for as long as 25 years.
Are we likely to see a final deal on the pipeline in August?
The deal will happen as soon as everyone understands the market. If all three countries -- Iran, Pakistan and India -- start accepting the market reality, we can have the deal tomorrow itself. But till that happens, it could take some time.
How important is this deal for Iran?
Not just this deal, any mega project is good for the region as it brings about peace and harmony. Besides alleviating poverty, the pipeline deal is important as it is economically and politically viable.
What are the hurdles before the project? Are the US sanctions against Iran and unrest in the region areas of worry?
US sanctions are not related to this project. All three countries have got over that. You have heard repeatedly and categorically from Indian officials that they have rejected any pressure from outside.
There is unrest in the region, but, like I said, the pipeline would actually bring about harmony, even as I know that terrorism is a cause for concern. About the hurdles, there are none except the people themselves. If everyone agrees and understands the market, which is the driving force, there will be no hurdle.