Reaffirming India's commitment to making the Iran-Pakistan-India (IPI) gas pipeline project a reality, Prime Minister Manmohan Singh said New Delhi was determined to strengthen its relations with Tehran as the two countries had civilisational ties for several centuries.

''New Delhi would pursue the Iran-Pakistan-India gas pipeline and work to make it a reality,'' he said during his reply to a debate on the Indo-US nuclear deal.

On the controversy relating to Iran's nuclear ambitions, he said that of late, there has been a positive realisation that coercive methods were not desirable and the problem could be resolved only through dialogue.

''While Tehran has all the privileges of a signatory country to the nuclear non-proliferation treaty (NPT), it also has to honour the obligations that go with it,'' he said.



India, Pakistan and Iran have agreed to appoint an independent consultant to resolve a pricing dispute over a natural gas pipeline to span the three countries, officials said.

India and Pakistan want to pay less than the price proposed by Iran for the gas, which would be channelled to the subcontinent from Iran via a 2,600-km (1,615-mile mile) pipeline.

If built, the pipeline is expected to be able to handle 150 mm cm (5.2 bn cf) of gas a day and will cost around $ 8 bn (EUR 6.25 bn) to build, according to current estimates.

"The consultant will submit (a) report within one month," India's Petroleum secretary M.S. Srinivasan was quoted as saying at the end of trilateral talks on the proposed pipeline.

The decision to appoint a consultant was taken after the three countries could not agree on pricing. India and Pakistan, jointly negotiating the gas price with Iran, had earlier rejected a pricing formula offered by Iran. That formula includes 10 % of the Brent crude price plus $ 1.20 (EUR 0.094) per mm Btu, a senior Indian executive close to the talks was quoted as saying. The executive cannot be named due to the sensitivity of the negotiations.

Going by the Iranian formula, the delivered price of Iranian gas would work out at $ 8.20 (EUR 6.4) per mm Btu, assuming a 15-day average Brent crude price of $ 70 (EUR 54.7) a barrel, the executive said. New Delhi is seeking delivery of Iranian gas at the India-Pakistan border of $ 4.25 (EUR 3.32) per mm Btu.

A senior Pakistan government official said Islamabad was also pursuing the pipeline with Tehran on a bilateral basis. Iran's Deputy Oil Minister M.H. Nejad Hosseinian, leading the Iranian delegation, said Iran had already begun construction on the section of the pipeline inside its territory.

The project was first proposed by Iran about a decade ago. Iran wants to develop outlets for its large proven natural gas reserves, estimated at 23 tcm (812 tcf). If the project goes ahead, India could initially buy up to 60 mm cm, or mm cm of gas a day from Iran, while Pakistan could buy as much as 30 mm cm.

If everything goes well, the pipeline could become a reality by 2011, Indian officials say.

According to the latest government estimates, India's gas demand is expected to rise to a massive 400 mm cmpd by 2025 from the current 150 mm cm.



The cost of natural gas Iran is offering to Pakistan and India "cannot be very far away from international prices", Iranian President Mahmoud Ahmadinejad said. Ahmadinejad also said that the Indian "mistake" of voting against Iran at the International Atomic Energy Commission (IAEA) meeting in Vienna last year would not hit bilateral ties.

He said Iran had a lot of offers for its gas from Europe "with very high prices. Nevertheless, we would like this pipeline to be constructed and stretch between Iran, Pakistan and India. We want this pipeline to be the pipeline of brotherhood and peace. And of course we would very much like to be flexible."

But he made it clear that the National Iran Oil Company (NIOC) would work out an agreement with economics in mind and it would want to sell the natural gas at the best possible price.

"This natural gas pipeline will be securable and bankable operation," said Ahmadinejad, the highest-ranking Iranian to speak on the issue that is bogged down by differences over pricing and US objections to collaboration with Iran. "With that in mind, its prices cannot be very far away from international prices. I think we can come to agreement. (We should give) some time to the experts of the three countries to reach an agreement."

The president said there were also differences between India and Iran over the sale of liquefied natural gas (LNG).

"I myself am personally following matters. I have directed my colleagues to approach the Majlis (parliament) and ask them where we stand on the LNG issue. I think that in about 30-40 days time now, we will have an answer."

Iran and India, he said, had many shared interests but insisted that New Delhi's vote against Tehran at the IAEA meet last year in the company of the US was a "mistake".

"We were dismayed with the position taken by the Indian government. This came as a surprise. Having said that, this will not play a role in determining our relations. Ours is not the kind of relationship that will be affectedby one mistake. I think the relations are important enough that if one of the parties makes a mistake, they would correct that mistake themselves."

Ahmadinejad also spoke at length about the Iranian nuclear row that many feel could trigger another military showdown in the region. He said Iranians "no longer have any confidence, any trust" in the position taken by the West and other countries that are seeking to curb Tehran's nuclear programme, saying it was meant not to produce energy but to covertly develop weapons.

"We are interested in continuing with negotiations. But their most recent behaviour is reason enough for us to doubt their sincerity," he said. "Given everything that has happened, we no longer have any confidence, any trust."

He said the West was not looking for a dialogue.

"In all honestly, they do not want to talk to us but want to impose their wishes on us. They want to deny us our rights. But they have miscalculated. The time for such behaviour is in the past, it's finished... And they will regret the miscalculation they have made today."

Source: HindustanTimes.com

Iran said that India is showing flexibility in the price it is willing to pay for natural gas that will run through a proposed $ 7.4 bn pipeline from the Iran to India.

"They're showing more flexibility on the price. We'll meet again in Tehran in two to three weeks. I'm hopeful we can reach a deal soon," Mohammad Nejad Hosseinian, the deputy minister of international relations at the Iranian Ministry of Petroleum, told.

Iran, India and Pakistan, through which the pipeline will run, agreed recently to hire a consultant to determine a gas price that India should pay that takes into account all the various costs involved in the pipeline project and an adequate profit margin for Iran. Hosseinian added that he expected that the consultant report should be completed soon.

Iran, which holds the world's second biggest natural gas reserves after Russia, has sternly rejected India's previous offer to pay a gas price of $ 4.2 per mm Btu. Iran initially was demanding a price of $ 8.0 per mm Btu although Hosseinian, who has been one of Iran's lead negotiators in the dispute, said that the country was unlikely to receive that price.

Iran has proposed that the gas price be calculated by using the liquefied natural gas monthly index used in Japan, the world's biggest LNG importer, Hosseinian said.

"Japan's the largest LNG importer. We think the monthly index it uses for pricing LNG is a good model," Hosseinian said. The index used by Japan accounts for various transport costs that are similar to the transport expenses involved in shipping gas via pipeline through Pakistan and onto India, he said.

India is anxious for the gas because of its growing use by industry, which uses gas as a feedstock, and expected use from power plants.

The 2,600 km (1,600 mile) Iran-India pipeline would originate at the landfall site of Iran's giant South Pars gas field, travel through Iran to Pakistan and then across to India.