The Hindu Business Line : Pressure in the pipeline

It is clear that New Delhi has begun paying for the anti-Iran vote it cast in Vienna last September at the International Atomic Energy Agency. In fact, just after the vote, it was made clear by the Iranian envoy in Austria that Teheran would no longer be willing to go through with the $21-billion deal under which Iran was to supply liquefied natural gas to India for 25 years beginning 2009. At the time, a Teheran foreign ministry spokesman said categorically that Iran would "revise (its) economic relations, and these countries (which voted against Iran) will suffer," adding, "our economic and political relations are coordinated with each other." The Iranian Deputy Oil Minister cited in New Delhi on Tuesday the low price of gas as the reason for Iran not wanting to go through with the deal. But it is obvious that there is more to it.

Seen against this background, it is not surprising that the $7-billion gas pipeline project from Iran, via Pakistan, has also come under the scanner with the Iranian Minister saying that the project would have to be finalised by July. Though the point was emphasised that New Delhi remained very much a partner in the three-nation project, it is now clear that, provided there is no change in the Iranian stand on the July deadline, there is little prospect of India being a part of project. Indeed, the Minister went out of his way to say that failing the finalisation of the project within the stipulated period, Teheran "will pursue bilateral exports to Pakistan". There is every possibility of Teheran revising its stand in the weeks ahead especially as the sale of gas is important to the Iranian economy. Indeed, this point New Delhi will certainly keep in mind as it works out its response to the Iranian diplomatic offensive. But the fact remains that the Iranian move on the two projects has once again underlined the strategic energy deficiency the Indian economy is faced with — some thing that cannot be tackled overnight. In fact, studies show that India's demand for gas will treble without there being a concomitant scaling up of domestic supplies.

What all this means is that the efforts being made to import gas from places such as Myanmar and Australia should be speeded up, not to speak of greater efficiency in exploiting the huge gas fields discovered within the country, such as in the Krishna-Godavari Basin. Since the Iranian gas would have flowed into the country not for three-four years (as per the two project schedules), this time the country has to increase its gas availability. In case the Iranians alter their stand on the two projects, New Delhi would do well to bargain even harder on the price of the gas to be transported by the pipeline (the LNG deal was finalised in January 2005), an issue which has held up the project till now mainly because of Teheran's intransigence.

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