Iran, India to launch new round of energy talks

Business Materials 1 December 2009 12:01 (UTC +04:00)

An Iranian delegation traveled to New Delhi on Sunday to review expanding energy ties with that country.

The Iranian delegation is headed by the National Iranian Oil Company (NIOC) Managing Director, Seifollah Jashnsaz, SHANA news agency reported.

Indian firms' participation in the development of Iran's South Pars gas field's phase 12 and Farzad B gas field, as well as negotiation on the Iran-Pakistan-India proposed pipeline are the main issues to be discussed.

Two days ago, the Indian news agency Press Trust of India reported that India's Oil and Natural Gas Corporation (ONGC) overseas investment arm, ONGC Videsh Ltd, will hold talks with officials of NIOC in the upcoming week. 

ONGC is seeking a 20-25 percent stake in the $7.5 billion project of Iran's South Pars gas field's phase 12 development plan.

The Indian firm also eyes developing the Farsi gas field.

ONGC Videsh and Hindujas had in the past signed separate MOUs with Iranian Petropars for a stake in the South Pars project and are independently talking to NIOC.

The sources said ONGC Videsh would negotiate to get LNG (liquefied natural gas) in return for its efforts in both the projects.

Iran, which has the world''s second-largest gas reserves after Russia, has estimated it would require $40 billion to develop the remaining phases of the South Pars fields within 10 years, Reuters reported.

During his visit in mid-November Iranian Foreign Minister Manouchehr Mottaki said that the "door is open" for India to rejoin the Iran-Pakistan-India (IPI) gas pipeline but indicated that Iran could not wait indefinitely and the structure of the project could change in the future.

The Indian officials also flagged New Delhi's interest in the IPI gas pipeline project.

"We have a bilateral arrangement with Pakistan and the door is open for our Indian friends. IPI will be a reality ... but I am not sure about the future," Motakki said.

According to Mottaki more than 100 km of the pipeline has already been laid on the Iranian side and the Pakistani side has also "started action" on its side of the border.

Iran, Pakistan, and India conceptualized a gas pipeline project in the 1990s, dubbed as the IPI - or peace pipeline- to help boost peace and security in the region.

Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari inked a $7.5 billion agreement in Tehran on May 23, finalizing the deal to transfer gas from Iran to Pakistan, Press TV reported.

According to the deal, Iran will initially transfer 30 million cubic meters of gas per day to Pakistan, but will eventually increase the transfer to 60 million cubic meters per day.

Negotiations over the project were initiated in 1994 between the three countries but there were obstacles to closing the three-way deal due to tension between India and Pakistan.

Due to the tense India-Pakistan relations, New Delhi stepped back from the later stages of negotiations, although it has never formally withdrawn from the project. 

During the talks, the Indian officials had asked Iran to sort out a number of issues, such as the security of the pipeline and the gas price formula.

India didn't participate in the last several rounds of talks, but Iran repeatedly encouraged India to rejoin the process.

The IPI gas pipeline is a proposed 2,775-kilometer pipeline to deliver natural gas from Iran to Pakistan and India. 

The project is expected to greatly benefit India and Pakistan, which do not have sufficient natural gas to meet their rapidly increasing domestic demand.

Pakistan -- facing an energy crisis -- plans to generate 4,600 megawatts of electricity with Iranian natural gas.