The government on Monday made it clear that it will not bow to external pressures in deciding on participating in the $7.4-billion IPI (Iran-Pakistan-India) gas pipeline project but listed several outstanding issues, including the final gas price, with Iran as impediments to signing a contract.

However, sources said, ?Iran is keen to involve Indian companies in the newly discovered natural gas fields in the country.?

?Iran has a large amount of gas, is interested in business with India and is open to negotiating not only the IPI pipeline but also the transport of natural gas by several optional routes from their country through the deepwater pipeline to India,? sources told FE on the condition of anonymity.

The minister of petroleum, in response to a question in Rajya Sabha, said there were problems in implementing the project. Besides, the transport tariff, to be paid for the wheeling of gas through the section of pipeline passing through Pakistan, has not been decided yet. ?Energy needs of the country are paramount. There is no question of (succumbing to) any external pressure as far as energy security is concerned,? he said. ?We are very sure that the pipeline project is good for India, Iran and Pakistan.?

India wanted a guaranteed supply of gas and wants the delivery of gas at its border with Pakistan but Tehran and Islamabad have agreed to hand over the gas at the Iran-Pakistan border, he added

The government should give a practical diplomatic push to source gas from Iran, say analysts tracking the energy security scenario in India.

Subodh Kumar Jain, director, South Asia Gas Enterprise (SAGE), said, ?The talks with Iranian authorities over the supply of natural gas through deepwater pipelines were very positive and they indicated that they are keen to work with India.?

SAGE Enterprise is a global consortium and is currently in discussions with Qatar and Iran to get natural gas from West Asia to India through the deepwater pipeline.

The consortium is expected to build on the extensive study of a deepwater route across the Arabian Sea, started during the mid 1990s and strengthened by the development work now undertaken by SAGE. ?The deep water section will reach a depth of 3,500 metres and will be just over 1,000km in length,? explained Jain.

Iran and India, being close neighbours, the inter-connection of the two countries by natural gas pipelines is very typical of pipeline systems worldwide and establishing such a pipeline between Iran and India has been under discussion for over a decade.

The transport of natural gas at a lower cost than LNG, over distances up to around 2100 km and the transport of Iranian gas by offshore pipeline to any place south and west of Jaipur in India can provide a shorter, more direct route than by an overland pipeline.

?A shallow, conventional coastal route to India involves a pipeline across the Indus Canyon, which is extremely challenging even today. Until recently, the geo-politically attractive Arabian Sea route was considered too deep but is now thought of as a more practical solution,? said Jain, responding to why numerous offshore gas pipelines from Iran to western India built over the last 30 years haven’t paid off, either along the coast or across the Arabian Sea.

?India will continue to need more gas through the LNG and pipeline modes. The spot LNG price is now low but India was, until recently, paying $18-22 per mmbtu. Pipelines provide a complementary long-term supply option to price volatile LNG to help India achieve a resilient, balanced, energy profile,? said sources in the government. So far, over 2000 TCF gas reserves are said to be available in West Asia, and out of this, only 8 TCF is required for each deepwater pipeline, to be laid by the SAGE consortium.

?Current negotiations with Iranian authorities for the deepwater pipeline by the SAGE consortium are not government to government, but more on the lines of commercial negotiations. These negotiations have the stamp of approval of both the ministry of external affairs, as well as the ministry of petroleum,? sources said.

The consortium is expected to evolve into an energy corridor with a regional gas gathering ‘hub’ fed by multiple sources exporting natural gas through a multi-pipeline deepwater gas highway to India and will permit Iran to sell gas here at the market price.

South Pars gas allocated to India for the IPI line can well be transported to Gujarat through the deepwater pipeline because the distance is more or less similar.

Also, the US may levy sanctions against companies investing more than $20 million in Iran under the Iran-Libya Sanction Act.

However, sources told FE, ?The sanctions that could be imposed are mainly for investments made in Iran and there are no sanctions on buying gas from that country.?