By Jason Simpkins
After a visit to Sri Lanka, Iranian Prime Minister Mahmoud Ahmadinejad stopped off in India yesterday (Tuesday) to put the finishing touches on an agreement that will bring Iranian gas to Pakistan and India through a $7.6 billion pipeline.
The 1,615-mile pipeline will transport 30 million cubic meters of natural gas to Pakistan and India upon completion of its first phase. Capacity will later increase to 45 million cubic meters.
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It will be integral in shoring up India's energy grid, as the country currently imports 70% of its petroleum needs. India's current gas supplies of 85 million cubic meters a day fall well short of the country's potential demand of 170 million cubic meters a day, according to government statistics. What's more is that demand could grow to 400 million cubic meters a day by 2025.
The possibility of a pipeline has been a point of discussion since 1994, but talks ground to a halt during price negotiations. India balked at the price of the gas, and Pakistan has expressed dissatisfaction with the proposed transit fees. Now, Ahmadinejad and Pakistan's President have "resolved all issues" related to the pipeline, the Associated Press of Pakistan recently reported, and that leaves New Dehli's cooperation as the last surviving hurdle. And Ahmadinejad's stopover in India has been widely interpreted as a landmark development that will usher in a new era of energy cooperation.
"There will be a proposed review that will be taking place which will discuss the price, review the price, certification and project structure," Manu Srivastava, director of India's Ministry of Petroleum, told Bloomberg News. Though he cautioned that, "there are a lot of issues to be resolved."
Still, with India's need and Iran's availability, the deal seems to be a near certainty at this point. Particularly since India's communist party torpedoed a historic nuclear power agreement with the United States. The deal would have opened the door to peaceful cooperation between the United States and India concerning nuclear power as an alternative to fossil fuels. But without it, India has no choice but to improve ties with Tehran.
The State Department's Sean McCormack said Monday in Washington that the United States would "counsel against" the pipeline plan.
"Given where Iran is in the international system, being under sanctions, and given its actions within the international system, is now really the time to conclude a pipline deal with the Iranian government?" he said.
However, insinuations from the United States that India should turn its back on Tehran or use its leverage to pressure Iran into abandoning its alleged nuclear ambitions have not been welcomed by policymakers.
"India and Iran are ancient civilizations whose relations span centuries," India's Foreign Ministry said last week. "Neither country needs any guidance on the future conduct of bilateral relations."
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Iran holds key to India's energy insecurity