Will ensure safety of IPI pipeline: Pak to India

With New Delhi boycotting formal talks for almost three- years, Iran and Pakistan this month signed last of a series of agreements for implementing the project on bilateral basis. Islamabad insists the agreements have "in-built" mechanism to accommodate India should it decide to join the project.

"We (the State of Pakistan) will stand guarantee for safe delivery of gas (at Pakistan-India border)," Mohammed Chaudhry Ejaz, Additional Secretary in Pakistan´s Ministry of Petroleum and Natural Resources, said in an interview here.

Of the 1,035-km length of the pipeline in Pakistan, only 100-odd km would be exclusively for carrying gas to India while the rest would be transporting fuel for both Pakistan and India.

"We have up to nine hours of power outages and we need Iranian gas to bridge this rising deficit. It is in our interest that the pipeline is safe and we get the gas to generate power and fuel industries," he said.

India was widely believed to have decided not to pursue the project after the 26/11 terror attacks in Mumbai with apprehensions being expressed about terrorists holding the pipeline hostage to their demands and even cutting supplies by blowing the pipeline to hurt the interest of world's second fastest growing economy.

New Delhi, however, has not officially called it quits yet and is proposing talks with Iran to sort out impediments. It wants to take custody of gas, that triggers payments for the fuel, only at Pakistan-India border to make Iran explicitly responsible for safe passage of gas through Pakistan.

Also, it wants gas utility GAIL (India) to take a stake in the 1,035-km pipeline section in Pakistan to make the project bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of the operations.
"Yes, we will more than welcome India to join the project length in Pakistan," Ejaz said when asked if Islamabad was open to India taking stake.

He said Pakistan in July 2009 signed a Gas Sale and Purchase Agreement and this month signed among other pacts a Gas Transportation Agreement, which has been notorised in Paris, provides for internationally acceptable transit arrangement for gas to be supplied to India.

"The agreements can be legally enforceable in any international court of law. The transit agreement makes us liable for safe supply of gas. We stand 100 per cent committed to safely supplying gas to India," Ejaz said.

Iran, in the GSPA, has committed to selling gas either from one of the phases of the giant South Pars offshore field or divert fuel it may import from one of its gas-rich neighbouring country.

Ejaz said like India, Pakistan has a growing energy deficit. Pakistan faces a gas shortfall of 10.34 billion cubic feet per day (bcfd) by 2015. The indigenous gas supply is projected to fall to 2.16 billion cubic feet per day from current day supply of 4.3 bcfd. The demand for gas would stand at 12.5 bcfd by 2015.

Iran plans to export 2.2 bcfd of gas through the proposed pipeline, of which Pakistan's share would be 1.05 bcfd. If India does not participate, Pakistan had planned to consume the entire volumes.

The official said Iran has laid a large 56-inch line from Persian Gulf coast to Iran-Pakistan border with a view to accommodate supplies to both Pakistan and India. "Considering Iran's internal consumption, they did not need such a big pipeline."

Ejaz said according to pricing agreement between Iran and Pakistan, the gas will cost USD 7 per million British thermal unit if the crude oil price was USD 50 per barrel, USD 9.4 and USD 13 per mmBtu at oil rate of USD 70 and USD 100 per barrel respectively.

The estimated cost of the project was USD 1.2 billion inside Pakistan from its point of entry in Balochistan up to Nawabshah, the hub of the country's gas pipeline system. New Delhi has so far downplayed the agreements, officially only saying that it had price and security concerns which need to be addressed before it can join the project.

But, it may be preparing ground to formally quit the project. India's ties with Pakistan have dipped after Islamabad failed to act against culprits of 26/11 Mumbai terror attacks. It sees a serious terrorist threat to the pipeline particularly in Baluchistan province, home to a militant Islamist separatist movement.

Instead, New Delhi wants to buy gas in its liquid form (LNG) that can be shipped or through a deep-sea pipeline avoiding the Pakistani territory totally.

Under the Iran-Pakistan-India pipeline proposal, a 1,100-km pipeline from the South Pars gas fields in the Persian Gulf was to be laid by Iranian firms to Iran-Pakistan border. A 1,035-km pipeline was proposed in Pakistan to connect to the gas grid in Pakistan as also carry India's share to Pakistan-India border.