‘Gas deal is on’

Iran is close to signing an agreement with India and Pakistan for implementing the envisaged IPI gas pipeline project, says Iran's ambassador to India Sayed Mahdi Nabizadeh in conversation with Hardnews

What is the latest status of the envisaged Iran-Pakistan-India (IPI) gas pipeline project?
In view of the constructive and beneficial talks that took place during President Mahmoud Ahmadinejad's visit to India, it is hoped that the trilateral agreement will be signed by the middle of summer this year. Ahmadinejad informed Manmohan Singh regarding Pakistan's proposal about China joining the project and stressed that Iran wants the pipeline to reach India first. The Iranian president, in his press conference in Delhi, said, "All aspects of China joining the pipeline will be studied." After the president's recent visit to India and Pakistan, we have witnessed positive progress regarding implementation. President Ahmadinejad has declared that Iran, India and Pakistan would resolve all issues concerning the pipeline within 45 days. In such a situation, this project will be the biggest economic project based on energy in the Asian region and these three important countries will be united with each other and their economic interests will be tied up with each other.

What is the importance of the project for Iran which is looking for new buyers for its gas outside Europe?
Iran, in view of its policy of 'Looking East', gives great importance to cooperation with Asian countries like India and believes that the peace pipeline can act as a symbol of these ties. Iran attaches great respect to the views of Pranab Mukherjee regarding meeting India's energy needs from countries of the Persian Gulf region, including Iran, which he expressed during his recent visit to some Arab countries. He said that energy security and development of infrastructure is the basis of the new relationship of India in the region. He added that this reality should be accepted that India needs to keep its high rate of growth every year for a period of 15 to 20 years. For meeting the targets of development of infrastructure announced in the Eleventh Five Year Plan, India needs about $500 billion in the form of economic resources. According to Mukherjee, India needs to raise its electricity production till 2032, six to seven times of the present production; and that will be the basis of the new relationship.

Do you think this project will eventually lead to an integration of fragmented energy markets in the region?
The Asian Parliamentary Union consisting of 39 countries, as the main producers and consumers of energy in Asia, lay stress on cooperation in the energy sector. These countries, in the first-ever meeting of the Energy Committee on May 15, 2008 in Moscow, stressed on the establishment of a unified gas grid at the level of Asia. It was decided that the issue would be discussed more seriously in the next meeting of the committee in the last season of the current year, so that its implementation stage is arrived. In the unified Asian gas grid project, security of the supply as well as demand will be provided. The salient features of this plan include more convergence among the Asian nations, decrease in transport cost and facilitation of gas transfer. Its other important features are that there will be no interference in the manner of arriving at agreements among nations and their customers, including over the price and decisions of the countries; this will be thoroughly respected. The IPI pipeline is one of the important features of this project. This pipeline can join the unified Asian grid. Therefore, unity between the producing markets and consumption of energy in Asia will be inevitable in future.

Do you think this landmark project has the potential to boost cooperation among the participating countries in other areas too, eventually making the region's geo-politics subservient to the goal of economic prosperity?
In view of the unification of the Asian energy grid, political issues in many circumstances may naturally become subservient to the long-term economic aims of the Asian countries and the peace pipeline will not be an exception.

Iran's insistence on charging a higher price for LNG to India under the proposed deal has led to questions about Iran's reliability as a business partner. How do you see it?
Every agreement normally defines its process of implementation and this particular agreement is yet to complete its necessary process and therefore such an impression has come into being.

Is Iran still committed to the LNG supply deal with India or is it looking for another buyer?
Iran has always expressed its interest in the joint production of LNG and is ready for cooperation with the public and private sector of India. The MoU signed by the Hinduja-OVL consortium with an Iranian National Oil Company subsidiary is a valuable example.
The government of Iran, with a view to showing its goodwill, has on many occasions given India the opportunity to study the price formula. Moreover, no agreement between the two countries contradicts any bilateral agreement between them and it is necessary that every agreement be considered and finalised on the basis of the current international market situation and on the basis of a win-win formula.

As an energy market, how important is India for Iran?
Iran and India, during the past few decades, have been willing to expand economic and political ties. We always stress that our culture is a win-win culture for both parties and we welcome presence of big public and private sector Indian companies in all economic spheres of Iran. We also welcome any kind of cooperation with them in any part of the world.