IPI Pipeline Discussion Thread

Discussion in 'Subcontinent & Central Asia' started by A.V., Feb 22, 2009.

  1. A.V.

    A.V. New Member

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    NEW DELHI: Iran has jacked-up by 20% the price of natural gas that is to flow through the long- delayed Iran-Pakistan-India pipeline, making it the
    most expensive fuel in the country.

    At the current crude oil price of $40 a barrel, Iranian gas will cost New Delhi $5.9 per million British thermal unit at Iran-Pakistan border, sources said.

    Iran, which had originally priced its gas at $3.2, had in 2007 revised the rates to $4.93 per mBtu at $60 a barrel crude oil prices, which was accepted by India.

    Sources said Iran has again changed the formulation that would mean India paying $7.1 per mBtu in the likely event of oil prices rising to $50 and $8.3 per mBtu if oil price was to touch $60 a barrel.

    Added to this would be a minimum of $1.1-1.2 per mBtu towards transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, they said.

    Gas from the Panna/Mukta and Tapti fields in Mumbai offshore fetches the maximum $5.70 per mBtu, while Reliance Industries' Krishna Godavari basin gas has been priced at $4.20 per mBtu if crude oil price was $60 or more.

    Sources said New Delhi was likely to reject the changes, which were conveyed by Iranian chief negotiator H Ghanimi Fard to Indian ambassador to Iran last month, as unilateral revisions was against the spirit of stable contract regime.

    Issues like frequent revisions in prices and terms made by Iran have delayed finalisation of the agreement on the IPI pipeline which should have become operational in 2010 if things would have gone as agreed in 2005.

    The latest move by Iran, which holds the world's second largest gas reserves, may have been triggered by the drastic fall in international crude oil prices which have dived from $147 a barrel in August 2008 to below $40 now.

    As per the previously agreed formula of charging 6.3 per cent of the the 10-month average of Japanese Crude Cocktail (JCC) plus a fixed $1.15 per mBtu, the gas price at the current crude oil price would have come to $3.67 per mBtu.

    So the formula has now been changed to 12% of JCC plus $1.1 per mBtu fixed cost, sources said, adding, this would be the price of gas at Iran-Pakistan border.

    Sources said Iran was not willing to commit to a supply- or-pay regime wherein it would have been held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries.

    Iran has also ignored New Delhi's demand for a trilateral mechanism for securing delivery of gas at Pakistan-India border. All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad.

    http://timesofindia.indiatimes.com/...rice-for-IPI-pipeline/articleshow/4168869.cms
     
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  3. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    The project is as good as dead unless some dramatic changes in Geo politics happen. Pakistan is too unstable country to believe and now even Iran saying that they will chase the terrorists in Pakistan.
     
  4. Singh

    Singh Phat Cat Administrator

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    IPI was never going to be feasible. India cannot afford to put all its eggs in one basket and place that basked under the care of Pakistan.

    India is diversifying and is making investments in oil and gas fields in Middle east, Africa, Latin America, Central Asia, Southeast Asia. The huge domestic findings don't hurt either.
     
  5. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Also tensions seem to be increasing between Iran and pakistan from the whole shiite-sunni angle.
     
  6. Neo

    Neo Senior Member Senior Member

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    I beg to deffer, Iran has never interfered in Pakistani religious affairs. Shiah-Sunni devide is almost a dead issue now, specially compared to the nineties when religious devide cost more Pakistani lives than ever before in the national history.

    Back to the topic now. India should pull back from the project and let Iran-Pakistan sort things out, the pipeline is going to be built with or without India.

    Just my two paisa..
     
  7. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    as long as USA is in afghanistan I doubt this will happen.
     
  8. Neo

    Neo Senior Member Senior Member

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    Pakistan can not afford to waste more time. Unless US comes with a workable alternative Pakistan will go ahead with the pipeline. Work is to start late this year.

    We're already importing oil from Iran without any pressure from US and 1.000MW of Iranian electricity will be added to the grid via Gwadar by the end of the year.
     
  9. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    I have a feeling part of the terror war in afghanistan is to prevent this pipeline from being built, US seems to have pressured India out of it and maybe the same for pakistan in the future, USA wants to keep Iran as isolated as they can and shutting down their trade especially in oil is a major focus for US, especially since Iran wants oil traded in Euros a very dangerous development which can seriously damage the American economy.
     
  10. Singh

    Singh Phat Cat Administrator

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    I differ, for example Iran has links to Tehrik-e-Jaferia-Pakistan and Sipah-I-Muhammad Pakistan, the Shiite groups to counter Sunni/Wahabi groups like SeS, LeT, JeM etc.
    http://www.satp.org/satporgtp/countries/pakistan/terroristoutfits/SMP.htm
    http://www.satp.org/satporgtp/countries/pakistan/terroristoutfits/TJP.htm

    Iran is also building a 500-600 mile concrete boundary wall alongits borders with Pakistan.

    Recently the Pakistani embassy in Tehran was attacked by Iranians to protest killings of Shias in Pakistan.

    I am not an expert in gas and oil industry but I reckon Pakistan can benefit by importing gas by road and than utilising its existing pipelines. It can help employment, increase contact between the 2 Balochistan, India will be kept out of the loop permanently and not be expensive.

    With the super high rates of 12% of Japanese crude index + additional charge and no supply guarantees. Best of luck.
     
  11. Neo

    Neo Senior Member Senior Member

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    Pakistan is using the Iran card against USA and with our growing thrust for oil we certainly do have a case here.

    India backed off from Iran and got the nuke deal in reward where as Pakistan still is searching for alternatives. Unless US s ready to offer us same deal, which is unlikely to happen anytime soon, there's no one stopping us buying from Iran. Gwadar will become a regional hub re-exporting oil, some of it will come from neighboring Iran.
     
  12. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    the crude still has to be refined and distributed so any pipeline would require huge a refining operation.
     
  13. Neo

    Neo Senior Member Senior Member

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    Both governemts know that there are elements working against them and at official level there's been no talk of retaliation or theats. Pakistan is growing in importance for Iran, issues as religious devide will not hamper ongoing projects.
     
  14. Singh

    Singh Phat Cat Administrator

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    Iran being a shia nation and Pakistan being a Sunni nation, known for sectarian trouble and under Saudi(Arab) benediction, will entail that undercurrents will exist.
    At the moment though, Sunni-Shiite tensions are not as high as they were at one time (though they simmer), now the tensions are regarding Afghanistan, and Balochistan.
     
  15. Neo

    Neo Senior Member Senior Member

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    Three mega refineries are in the pipelines, the largest will be built in Gwadar.
    Abu Dhabi recently re-engaged in the project after abandoning it few months ago.
     
  16. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    having a first look at the way the pricing is being done, one would be forced to say logic goes for amiss but i would be more interested in knowing how does it all work out in the international arena, is it just like what iran and russia are doing or there is a greater level of understanding and the contracts signed on the dotted lines have a higher level of commitment to it. in case it is the latter then one would say it is fool hardy to go in for a contract with iran on this but in case it is the former then i dont see much problem. can some one reflect on our contract with qatar, the pricing part, and how well they honour those signed contracts especially when the crude prices goes soaring high.

    strategically speaking, india needs to keep iran “engaged” on the ipi, and by doing this make sure that this pipeline never sees the day of light, if it is not coming to india. i have a belief, a lot will depend who will form the next government in iran, if it is of the choice of US administration which would like to smoothen ties with the west then this pipeline is very much alive and kicking and if that is not to happen then there is no way on earth this pipeline is seeing the borders of pakistan or for that matter the heartland of pakistan, and in that case all india needs to do is keep both these counties bogged down on our joining and play a truant.
     
  17. Neo

    Neo Senior Member Senior Member

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    Geographical benefits will ensure the pipeline becomes a reality. Gwadar is only a few kilometers away from the border, for security reasons the pipeline can be built next to the Makran Coastal Highway instead of thru interior Balochistan.

    If India officially quits the project, we'll probably redesign the pipeline and let it enter Pakistan via Gwadar instead of Zahidan which is close to Pak-Afghan border.
     
  18. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    where will the oil be refined?
     
  19. Neo

    Neo Senior Member Senior Member

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    From Indian PoV I fully agree with you here.

    But do not underestimate the improtance of the pipeline for Pakistan, there's not much USA can do to stop if China decides to join the project. China is considered an ally for both Iran and Pakistan and has recently closed energy deals worth $100 billion. There are plans to extend the pipeline to China (IPC) and use Pakistan as an energy corridor.

    I'm convinced that the IP will be built.
     
  20. Neo

    Neo Senior Member Senior Member

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    In Pakistan and India. IP(I) is designed to tranfer crude oil only.
     
  21. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    the current American administation has softened their stand on Iran so I don't know if that means a pipeline maybe ok with them, USA wants to control the world energy supply so it's very interesting to see what happens either way I don't think India has completely abandoned the project.
     

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