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US Concerned About India-Iran Pipeline Project


India wants a pipeline to deliver natural gas from Iran
(Iraqi natural gas pipeline near Kirkuk pictured here)
U.S. Secretary of State Condoleezza Rice told India this week that Washington is opposed to New Delhi's landmark pipeline deal with Iran, a nation the United States is trying to force to abandon its nuclear program. But U.S. concerns are not likely to sway India, which is facing rapidly growing energy needs.

It is an ambitious project: a 2700 kilometer pipeline from Iran to India that would allow New Delhi to import the liquefied natural gas (LNG), that officials say India will need to keep its economy afloat.

A final deal could be completed in June, when India's Petroleum Minister is expected to visit Iran. The pipeline itself could be operational in 2009.

But the proposed $4 billion project is approaching completion at a time when Washington is intensifying pressure on Iran because of its controversial nuclear program and is not keen to have allies strike trade deals.

U.S. Secretary of State Condoleezza Rice made Washington's argument again Wednesday during meetings here in New Delhi.

Condoleezza Rice
"I think that our views concerning Iran are very well known at this time," Ms. Rice said. "And we have communicated to the Indian government our concerns about gas pipeline cooperation between Iran and India. I think our ambassador has made statements in that regard, so those concerns are well known to the Indian government."

Iran is under intense scrutiny by U.S. and European Union officials who want Tehran to abandon its nuclear program. So far, they have offered economic incentives to try to discourage Iran from pushing ahead with its nuclear ambitions. But analysts say Washington may want to isolate Iran economically if that plans fails.

But for India, this pipeline will ease its own pressing concerns. To sustain its current seven percent growth rate, the government imports more than 70 percent of the crude oil India consumes. And it is expected to import some five million tons of gas this year alone, with at least 20 percent coming from Iran.

Brahma Chellaney, an analyst with the New Delhi based Center for Policy Research, says India's energy needs simply outweigh any concerns it may share about Iran with the United States. As he points out, India already signed a massive deal to import LNG from Iran by sea in January.

"If U.S. pressure could be that effective, the Indians would not have recently signed a $40 billion contract with Iran for LNG," he noted. "It's a 25-year contract and India will be importing more than 1.2 million metric tons of LNG every year from Iran. That was a massive deal - much, much bigger than what the pipeline will involve."

India,- which is a nuclear armed power just like the United States, does say it expect Iran to fulfill its obligations to the nuclear Non-Proliferation Treaty, but is keeping trade a separate issue.

At the moment, analysts say there are no signs of serious friction between the United States and India on the pipeline issue.

But Sukh Deo Muni, a professor of international relations at Jawaharlal Nehru University in New Delhi, says if Washington takes a hard-line stance with nations that do business with Iran, it could affect its relationship with India.

"The overall atmosphere in India-US relations is so positive, that the Iran issue does not need to be played unduly out of proportion," he said. "But if the US takes a very rigid position, that, No - you can do nothing with Iran, this will definitely have a negative fallout."

The United States already has little used legislation on the books that requires Washington to sanction firms that do more than $40 million of oil or gas business per year with Iran. But analysts say it does not appear likely Washington will invoke it against India's state-owned energy companies any time soon. Rather, Secretary of State Rice has suggested that the United States and India work together to develop technologies to harness new sources of energy for both nations' growing energy needs.

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