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Pakistan Proposes Pipeline from Iran to India


Pakistan's new pro-business prime minister, Shaukat Aziz, is promoting the idea of an ambitious gas pipeline that would extend from Iran through Pakistan to India. Mr. Aziz Thursday told participants at the World Economic Forum in Switzerland that Pakistan wants to promote peace by boosting economic cooperation with its neighbors.

Mr. Aziz says Pakistan's fast growing economy requires more natural gas. His pipeline proposal would create an energy corridor that would provide gas for both Pakistan and India. Iran is initially enthusiastic about the idea and Mr. Aziz hopes to sign a framework agreement for the project when he visits Iran next month. The pipeline would cost $2-$4 billion and take three to five years to build. Mr. Aziz says the pipeline would draw from the huge Persian Gulf gas field shared by Iran and Qatar.

"So we're talking to both [Iran and Qatar]. And we're also talking to India about the energy corridor because their needs are really quite substantial. And what we're trying to do is use this to meet our energy needs and also create inter-dependencies between countries. Because we firmly believe that if you create the linkages and dependencies you can push the peace process forward much stronger," he said.

Mr. Aziz says if the pipeline project materializes it would significantly improve relations between traditional rivals, India and Pakistan. Both India and China, with fast growing energy-short economies, are seeking access to oil and gas supplies in the Middle East. Mr. Aziz, a former Citibank executive, says the project is in its early stages and there are several ways the transaction could be structured.

"I can describe some hypothetical scenarios," he added. "One, you set up a company that owns end to end, from the gas fields to the final use of the product. It could own the pipeline and different people could invest in it. Another is that we deliver the gas at the border, say India, and we collect it at the Pakistani border. The other could be that a consortium of oil and gas companies could join and fund the project. The other is that governments could do it. So all options are being looked at."

Mr. Aziz calls the project the peace pipeline. It would exploit Pakistan's strategic location at the cross roads of South Asia, Central Asia and the Middle East.

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