India is not a country that likes to be hurried. Especially not on vital matters of economic interest derived from energy source diversification?a priority issue for any government anywhere in the world, and one that affords very little space for recklessness. Iranian President Mahmoud Ahmadinejad displayed a distinct lack of tact in declaring the number of days it should take for the $7.6-billion Iran-Pakistan-India (IPI) pipeline agreement to be ?finalised?. This is one tick-tock setting India can do without. True, the likelihood of energy deficiency has grown starker, global gas prices are soaring, and India must import 90 million standard cubic metres per day (mmscmd) of gas to supplement domestic production of 190 mmscmd; demand projected by the petroleum ministry is 280 mmscmd in 2012. India?s foreign secretary Shivshankar Menon may even have said the project is ?doable?. But romanticising the 2,600-km pipeline, to run along some of the world?s most dangerous and inhospitable terrain, would be folly. The gas is needed, but realism must inform the project, not fanciful portrayals.
First, its significance need not be inflated. Note that there is already a $25-billion deal signed in June 2005 with Iran for the supply of 5 million tonnes of LNG. Also, there is the Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline project, which could supply 35 mmscmd. If ready by 2012, the IPI pipeline will deliver 60 mmscmd, though its capacity could go up to 150 mmscmd, of which Pakistan reportedly wants two-fifths. Further, as a shield against sabotage, Pakistan?s share of gas supplies should be routed through India, so that any disruption will have to be borne by both, jointly. As for commercial viability, the market price gradient makes gas at anything under $7 per mmBtu look cheap (it?s in dollars, please note), but remember, Iran bears a big opportunity cost in the gas staying in the South Pars field. On transit fees to be paid by India to Pakistan, a reasonable point between our offer of 15 cents per mmBtu and the latter?s demand of 49 cents could mutually be considered fair if the India-first gas routing formula finds consensual acceptance. If China joins the project, then by the same logic of access gate design, it should get the gas last of all, and after paying both the current consumption partners a transit fee.
