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India Optimistic Gas Deal With Iran Moving Forward

A deal that has been in the works for years to send natural gas from Iran to India through Pakistan is moving forward, with an agreement anticipated within months. However, some early supporters are questioning whether the time has passed for the proposed pipeline, which also faces opposition from the United States. VOA's Steve Herman in New Delhi reports.

Indian officials say Iran has offered to lower prices by 30 percent in an attempt to conclude a deal to send Iranian liquefied natural gas to India via Pakistan.

Indian External Affairs Minister Pranab Mukherjee discussed the $7 billion project with Iranian officials in Tehran during a two-day visit this week.

Iran has offered to hold a summit for heads of governments of the three countries to sign the deal, which would send 70 million cubic meters of gas a year to India.

Indian officials have said this week that an agreement could be expected by June.

Leena Srivastava is the executive director of The Energy and Resources Institute, an independent organization that for years advocated building the 2,600-kilometer pipeline. But she now thinks the pipeline is no longer critical, partly because India can rely on increasing domestic gas supplies.

"We are really pushing forward on the basis of the historical momentum of this pipeline," she said. "If we were to sit and re-evaluate today - in today's demand-supply scenario, in today's political context, we may not push it with the same level of enthusiasm."

India and Pakistan began discussing the project in 1994 but tensions between the neighbors stalled progress.

The United States, at odds with Iran because of its nuclear programs, opposes the pipeline. It is expected to apply pressure on both New Delhi and Islamabad to abandon it.

During his visit to Tehran, India's external affairs minister said his country's relationship with Iran is independent of its relationship with any other country, indicating U.S. pressure might not affect the pipeline plan.

Under U.S. law, Washington is required to penalize any foreign company investing more than $40 million in Iran's energy sector.

Energy expert Srivastava, at The Energy and Resources Institute, says Pakistan - not Iran - has the most to lose if the United States blocks the pipeline project.

"Pakistan is, if I may say so, struggling a little bit today," she said. "More than the economic benefits it would give to Iran, I think the economic benefits and the consequent relief it might provide to Pakistan should again be something that we need to be cognizant of."

Pakistan stands to earn hundreds of millions of dollars a year in transit fees but negotiations on those costs between New Delhi and Islamabad have yet to begin.

News reports here say talks between India and Pakistan on the pipeline are to be held next month.

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