The first is the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, which has been favored and supported by the US for many years and the second is the Iran-Pakistan-India (IPI) pipeline project.Last week a winner emerged between these two rivals during a regional summit of the leaders of Iran, Pakistan and Afghanistan. It is neither TAPI nor IPI. The winner is IP (the Iran-Pakistan line) with India dropped from the project because it withdrew from the negotiations over repeated disputes on prices and transit fees.
Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari signed an agreement last Sunday in Teheran finalizing the deal to supply and transfer gas from Iran to Pakistan, after 14 years of on-off negotiations over what was initially framed as the IPI line project.
According to the deal, the National Iranian Oil Company (NIOC) and Inter State Gas Systems (PVT) of Pakistan will initially deliver 30 million cubic meters of gas per day to Pakistan but will eventually increase the gas delivery to 60 million cubic meters per day for the next 25 years.
According to Iranian energy officials, the final and formal deal will be signed in less than three weeks in a third country, just after the first round of the Iranian presidential elections on June 12. In this regard, some sources say that the third country might well be India, which Iran still wishes to take part in the project. In fact, this was underlined by Hojjatollah Ghanimifard, the Iranian oil minister's representative to the IPI talks, when he said recently that India still had the choice to resume gas talks with Iran and Pakistan.
The start date for the construction of the much-delayed pipeline is planned for September 2009, to be completed in June 2014. Iranian officials have said the delivery of gas to Pakistan could begin in three to four years. The 2,775 kilometer pipeline will cost $7.5 billion.
When completed the IP pipeline will carry gas from Iran's South Pars fields to Nawabshah in Sindh province. The gas will be used solely for energy generation and help produce 5,000 megawatts of electricity for Pakistan. The price agreed upon presently is 80 percent of the oil price, which is about $75 dollars per barrel at the moment. As the gas price is subject to fluctuations in oil prices it may not be as low as initially bargained for, but in the absence of alternatives it appears to be the most feasible offer.
The IP line not only concerns the relevant regional countries but also others such as Russia, the European Union and China, which is also interested in the project. In fact, Russian gas giant Gazprom is keen to participate in the IP line. “We are ready to join the project as soon as we receive an offer,” Russian Deputy Energy Minister Anatoly Yankosky told Russian newspaper Kommersant recently. The paper quoted another top government official as saying Russia sees the IP line as a means to divert Iranian gas from competing with Russian gas on the European market. “This project is advantageous to Moscow since its realization would carry Iranian gas towards South Asian markets so that in the near future it would not compete with Russian gas to Europe,” Kommersant reported.
Furthermore, the paper reported that Gazprom spokesman Sergei Kupriyanov confirmed the company's interest in the IP line. It also cited an unnamed official in the company saying that Gazprom could serve as the pipeline operator or take part in its construction.
Whether Iran and Pakistan would be interested in Gazprom's overtures, is too early to say. But one thing is reasonably clear now: If significant quantities of Iranian gas are diverted towards South Asia, the Nabucco project, which counts on Iranian gas, would eventually be significantly affected. Thousands of kilometers away from Europe, the IP line also has this additional dimension.
