Agreement on Iran gas pipeline close: Pakistan

Says it has enough investors to build infrastructure required for the pipeline even in case India backs out.

india Updated: Feb 19, 2007 06:16 IST

Pakistan is close to signing a pricing formula with India and Iran on building a much-delayed $7 billion pipeline to bring gas from Iran to South Asia, Prime Minister Shaukat Aziz said on Sunday.

"We are very close to agreeing on tariff," Aziz told a gathering of oil and gas industry officials in Islamabad. "We are in a very advance stage and I think we are very optimistic."

A proposal to build the pipeline has been on the drawing board for years, but uneasy relations between nuclear-armed rivals Pakistan and India have prevented any progress.

The United States, at odds with Iran over its nuclear programme, opposes the pipeline project.

But industry officials said the three countries are likely to sign an agreement on pricing in June, which would be based on a price framework suggested by a British consultant, removing the major stumbling block to the project.

The British-based consultant Gaffney, Cline and Associates recommended linking the gas price to the average of the six-month Japanese crude basket preceding the month of delivery.

Aziz said he believed a gas pipeline from Iran through Pakistan to India was the easiest of several options to pipe gas to the sub-continent.

"We are hopeful that all the three countries -- Iran, India and Pakistan -- will sit together and try to come up with viable solution to make it attractive for all," he added.

Pakistan and India are hungry for energy as their economies growing at more than 6 per cent a year.

Pakistan says it faces a major shortage of oil and gas by 2010. India, which imports 70 per cent of its crude oil and produces barely half the gas it consumes, is hunting stakes in foreign oil projects and importing liquefied natural gas.

Aziz said Pakistan, located near the world's largest hydrocarbon reserves, would leverage that advantage to meet its energy needs.

"If for some reason India does not join Pakistan ... We have enough investors in Pakistan to build infrastructure required for the pipeline," he added.

"We have concluded that we need extra energy ... the key is the Iranian option."

Initial estimates suggest the proposed pipeline could feed 60 million standard cubic metres of gas per day to India and Pakistan from Iran, which sits on the world's second-largest reserves.

Aziz said a proposed gas pipeline from Turkmenistan through Afghanistan to Pakistan is another option to meet the country's energy needs.

"This is also an option. I would not put it off the table but it is not on the front," he added.

Proposals to build a pipeline through Afghanistan have been on the table since the 1990s, when the radical Taliban ruled the country, but security concerns in Afghanistan delayed the project.

"The situation in Afghanistan is very challenging and of course the distance has to be travelled in a terrain, which is very difficult and challenging," Aziz said.

The Turkmenistan pipeline would cross the southern Afghan province of Kandahar where Taliban guerrillas are still fighting Afghan and US-led NATO forces.

First Published: Feb 19, 2007 06:16 IST