Iran-India undersea gas pipeline unrealistic

Business Materials 8 December 2015 19:00 (UTC +04:00)

Baku, Azerbaijan, Dec. 8

By Umid Niayesh- Trend:

Iran's proposed undersea gas pipeline to Gujarat, India seems to be an unrealistic project, Hooman Peimani, a research fellow at the Tokyo-based Asia Pacific Energy Research Center, told Trend Dec. 8.

Iran has proposed and negotiated a large number of oil and gas pipelines with its neighbors and some other countries in its proximity since the 1990s, Peimani said, adding that with a few exceptions, they have remained on paper or been shelved for various reasons ranging from lack of financing to political issues, including opposition of the USA and/or the European Union.

It should be noted the Indian media outlets quoted Alireza Kameli, the managing director of the National Iranian Gas Export Company (NIGEC) as saying negotiations are underway to lay a $4.5 billion undersea gas pipeline from Iranian coast via Oman Sea to Gujarat, India.

The pipeline is planned to carry 31.5 million standard cubic meters gas per day and will be built in two years from the date of necessary approvals and a gas sale and purchase agreement (GSPA) being signed, Kameli said.

Under the proposal being discussed, SAGE (New Delhi-based South Asia Gas Enterprise Pvt Ltd) will lay the 1,400-km pipeline bypassing the exclusive economic zone (EEZ) of Pakistan. Any company wanting to buy gas from Iran can use the pipeline for a rent.

According to Peimani, while India is in principle interested in importing gas from Iran, the proposed offshore gas pipeline seems unrealistic for such purpose in absence of committed Indian gas buyers, among other factors, including the consent of especially the USA with which India has extensive and growing relations.

Apart from the absence of such consent despite the recent nuclear deal between Tehran and the world powers, it would be extremely hard, if not impossible at all, to secure financing for its construction when there is no guarantee for its use once constructed, let alone a profitable one, in absence of any long-term guaranteed buyer and thus market in India, the expert said.

Peimani further said that pipelines are huge financial undertakings and therefore no country or company construct a pipeline when there is no market for its gas.

"Given this reality, self financing by Iran and/or SAGE, if this option is on the table at all, would defy logic."