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India, Iran must sort out the price of piped gas: Indian gas expert

New Delhi, April 27 -- Negotiations between India and Iran over the gas pipeline issue might get stuck over the pricing of the gas by Iran. This was said to IRNA this morning by prominent Indian energy expert and Distinguished Fellow of Tata Energy Research Institute (TERI),R. K. Batra in New Delhi.

"Based on economics, gas from Iran should be priced at one dollar per million btu. What has been a bit worrying are a few statements which reportedly have come out of Iran which are looking at the same price for piped gas as for LNG. Now, if that is the case, then there are no great advantages to be obtained by India," said Batra.

"This is something that the Indian petroleum minister will be discussing with his Iranian counterpart during his coming visit to Tehran," said the expert.

To substantiate the price issue, Batra explained, "Around the world LNG becomes cheaper beyond a distance of three thousand kilometers. Iran-India gas pipeline covers much shorter distance.

Whatever may be the wellhead price, that is fine. But what ever is the cost advantages of moving the gas by pipeline, India - that is the customer - should get the benefit of that." He said, "Gas is the fuel of the twenty-first century. The real issue is India and Pakistan both need gas. India is diversifying its sources of energy supplies. So we are looking at gas, oil and, hydro power. And within each of these sectors, we are looking at various options.

"Speaking specifically in regard to gas, India is looking at natural gas from Iran both by the pipeline and in the form of LNG.

Given the vast gas needs of India, we are looking at Iran, Myanmar and Bangladesh. It's not that any one of these projects is at the expense of the other. If all these projects materialize it's not going to result in India becoming surplus in energy. Energy demand will increase and there will be new projects to address those demands," he said.

Earlier talking about the hard work and efforts that has gone into making the pipeline a reality, Batra said, "The gas pipeline between India and Iran is an extremely good idea and that is something Tata Energy Research Institute (TERI) have been pushing for nearly sixteen years." He said the biggest hurdle in the path of the gas pipeline was the lack of political desire and the insecurity in the region.

He observed during the interview, that while the first issue was, the problem India was having with Pakistan, the second issue was that no one within the government was taking the initiative.

"Mr. Mani Shankar Aiyar has taken that initiative very successfully," he opined.

"The current petroleum minister has done every thing to sell India as a gas consuming country which would like to import gas from any source that is willing to sell gas," Batra said before adding that "there is no exclusivity with regard to Iran".

"India has always had good relations with Iran and the pipeline is the most economic way of getting gas to northern India. LNG needs to be moved from the coastal locations to the demand centers but the pipeline comes into northern India where we need gas. It will come directly through Rajasthan to northern India. It is certainly is a win-win situation," Batra said.

Talking about the issues that needed to be sorted out before the pipeline takes off, R.K.Batra said, "India is very positive about the pipeline but we need to sort out the security issues, the transit fee payment to Pakistan, and the price issue." "India would take the delivery of the gas at the border between India and Pakistan and an international consortium would build the gas pipeline. One of the members of the consortium probably is BHP Billiton who has been doing a lot of work on this project. Other members would be financial institutions and other gas companies. But first of all we need to have an agreement on the project with Pakistan and Iran." "As far as India is concerned, we have said that Gas Authority of India Ltd (GAIL) will build the pipeline from the delivery point on the Indian border to wherever required within the country,"he said.

Explaining the merits of the consortium of such a project Batra said, "It gives a greater sense of security because then you are involving foreign players in the whole project as investors.

He said the financiers of the project must take into consideration India's position over the price differential which he regards as a "very significant" condition for India.

"The moment one says that LNG is coming in such and such a price and therefore the piped gas will also have to match that price, in such a case we may have to look at the project once again," he said.

... Payvand News - 4/27/05 ... --

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