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Iran Pakistan India Pipeline:Reality in Dream

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India of late realized its potential in its emerging relationship with USA. ... India and Pakistan are to sign separate gas purchase agreements with Iran and ... – PowerPoint PPT presentation

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Title: Iran Pakistan India Pipeline:Reality in Dream


1
Iran- Pakistan India Pipeline Reality in Dream
  • Girijesh Pant
  • Jawaharlal Nehru University
  • India

2
IPI Cross Border-Transnational Project
  • Drivers
  • Energy Security.
  • Peace Dividend.
  • Strategic returns.
  • Barriers
  • Indo- Pak Hostility.
  • Iran Under Sanction.
  • Strategic Constraints.

3
In retrospect
  • IPI passed through three phases
  • Phase One Energy security Indo Pak
    differences.
  • Phase Two Energy Security and Peace dividend.
  • Phase Three Strategic returns/constraints and
    energy security.

4
IPI Gains Strategic Salience
  • US West Asia Policy Focus Iran.
  • All the three regional players have defined
    relations with America
  • Iran and USA Hostile
  • Pak-USARestoration of parity.
  • India USA ---Buoyant.

5
IPI In the Strategic chess board
  • All the three regional players factor IPI in
    their relations with USA.
  • Iran promotes it to undermine US objective in the
    region.
  • Pakistan finds in opportunity to underline its
    significance in the region.
  • India of late realized its potential in its
    emerging relationship with USA.
  • USA sees it detrimental to its policy objectives
    in the region.

6
The Story Line
  • Idea was first tossed in1989.
  • India Iran MOU in 1993.
  • Indian Cabinet approved the of the project in
    2005.
  • Technically feasible economically win-win with
    huge Confidence Building dividend.

7
Recap India Iran to IPI Pipeline
  • Bilateral Project with three options
  • Land route High Security Risk
  • The sea route Highly Expensive
  • Shallow water of Pakistan.

8
The Bumpy road 1989-2003
  • Indian Concerns Pak hostility.
  • Pakistan Concern Indian hegemony.
  • Iranian Concern search for market. And busting
    sanctions.
  • Breakthrough The BHP Billiton Report in 2003

9
The BHP Billiton Report in 2003 Summary
10
(No Transcript)
11
Project Profile
  • The 2775-km land pipeline will connect Asslauyah
    fields in Iran via Balochistan.
  • In Indian border it will reach to Barmer,
    Rajasthan.
  • Initial cost was 4 billion . In 2007- it is
    approx 7.4 billion.
  • Total quantity of gas shall be 150 MMSCMD, of
    which 60 MMSCMD shall be supplied in the initial
    phase which will be equally divided as 30 MMSCMD
    to each Pakistan and India.
  • The year 2011 is the timeline for commencement of
    supply.

12
Some Vital Parameters
  • India and Pakistan are to sign separate gas
    purchase agreements with Iran and take deliveries
    of gas at Iran-Pakistan border.
  • India will separately enter into an agreement
    with Pakistan for transporting gas through its
    territory.
  • The pipeline would be laid in the three nations
    separately. Iran would lay a 1,100-km pipeline to
    the Iran-Pakistan border.
  • Pakistan would lay a 1,035 km from its border
    with Iran to the Indian border.
  • India would then pipe the gas to consumption
    centers.

13
The negotiations.
  • Seven tripartite meetings have held.
  • India participated in six trilateral meetings.
  • Skipped last meeting held in Tehran in Sept
    2007.

14
Issues on table Security Price Transit fee,
  • Security Pakistani Assurance.
  • Out of total 1000 km of pipeline, the 750 km
    portion will carry gas for both Pakistan and
    India and only 240 km pipeline shall carry the
    gas required by India.

15
Pricing Question
  • In 2005 Iranian proposal was agreed upon to fix
    price at 4.93 per mbtu (million British thermal
    unit) at oil price 60 per barrel and to remain
    the basis of pricing of gas for the entire
    25-years of contract.
  • Iran seeking modification envisaging revision
    in the formula every three years, based on
    international fuel prices and energy mix.
  • Pakistan wants to add a transit fee (10 of the
    gas price) and a transportation tariff, making
    the delivered price of gas at the India-Pakistan
    border 7 per mBtu.

16
Transport Transit fee
  • Pakistan position transit fee (10 of the gas
    price)
  • Indian position transit fees of 15 cents per
    mBtu. No transport as the pipeline is a joint
    project and about half of it will be common to
    both countries.
  • Pakistan has revised demand is 1.57 perm Btu to
    0.70-0.75 per mBtu as transportation tariff.
  • India ready to pay not more than 0.55 per mBtu
    (220 million annually).
  • On transit fee, Islamabad is seeking 0.493 per
    mBtu while New Delhi has offered 0.20 per mBtu.

17
Progress some mile stones
  • Differences are narrowing down extending to
    China as Pan Asia Pipeline.
  • Pakistan offered to buy 60 mmscmd from Iran, use
    half of it in Pakistan and sell the rest to India
    at the India-Pakistan border. To circumvent
    India's need to deal with Iran.
  • Pakistan said that it will initiate bilaterally.
  • On the Iranian part, 18 percent of the physical
    job has been completed
  • Tehran voices impatience with Delhi over
    pipeline delays.
  •  

18
Prospective reality
Never ending dream
19
Viewed From Tehran
  • Triple win economic, political, and strategic
    Project
  • Energy is vital component of Iranian foreign
    policy.
  • Iranian regime intends to make maximalist gains.

  • Iranian East ward energy moves are largely driven
    by difficulties in western market.
  • Europe is Irans preferred option Turkey Route.

20
The Strength
  • The rich volume.
  • The strategic location.
  • The New Geopolitics of Gas the rise of Gas opec

21
The Weakness
  • Gas industry yet to develop.
  • Foreign investment.
  • Impact of sanctions on prospective engagement.

22
The Trajectory three Scenarios
  • Scenario One Grand Bargain
  • Scenario Two Confrontation
  • Scenario Three Stalemate

23
the Grand Bargain
  • Iranian Gas would be moving to Europe.
  • In short run Iranian gas export to Asia would be
    not significant though in medium term prospects
    are better..
  • IPI would loose its strategic salience and would
    be dictated more by market economics.

24
Scenario Two Confrontation
  • Iran pursues more aggressive Energy diplomacy,
    better terms to Asia.
  • Asia cannot make much gains due to Sanctions.
  • IPI would remain in limbo.

25
Scenario Three The Stalemate
  • Energy will be high on Iran foreign policy
    agenda.
  • Asia will be offered carrot and stick options.
  • IPI will be kept alive project but the progress
    will be determined by foreign policy matrix of
    all the three stake holders.

26
IPI in Indian Energy Matrix
  • The three leading questions
  • How much gas India needs from Iran and how much
    Iran can offer and how reliable it would be?
  • At What price?
  • What is the time schedule of the project?

27
Significance of Iranian gas!
  • Indian Domestic Supply 170 mmscmd
  • Import 80.00mmscmd
  • Total supply 250mmscmd
  • Adding18(Iran)LNG)9(EnnoreMysore)60(IPI)40(TAP
    I)127mmscd.
  • Grand Supply 250127377mmscd
  • Estimated Demand263 to 314mmscd
  • Surplus377-31463 Iran supply is 601878 or
    301848
  • Iran IPI gas15.9 of supply.

28
Iranian Capacity to Supply IPI Nabucco pipelines
  • Iran does not have the gas available to meet
    demand from two of its major export initiatives,
    the IPI pipeline to India and the Nabucco
    pipeline to Europe, unless buyers reduce the
    volumes demanded.
  • Hadi Nejad Hosseinian, Iran's Deputy Oil Minister
    and long-standing gas negotiator.
  • Europe is asking for 100mn cu m of gas a day,
    while India and Pakistan need 150mn cu m of
    Iranian gas,

29
Demand-Supply Gap Source DGHC, GOI
30
Anticipated Production Profile source DGHC
31
Demand -Supply long term
32
Demand-Supply long term
33
New Findings India Under explored not Under
endowed
  • Domestic gas consumption, to go up from 115
    mmscmd in 2007 to 309 mmscmd by 2012.
  • Supply of gas from Reliance, ONGC and GSPC alone
    will be more than 200 mmscmd.
  • Add to this the new LNG capacity of Petronet at
    Dahej and Kochi, and supply is likely to outstrip
    demand.

34
IPI in Indian Foreign Policy matrix
  • Emerging India is revisiting its global and
    regional engagement.
  • The new economy is redefining its global and
    regional stakes.
  • The disjuncture between new economy and the
    polity however is a restraining factor.

35
IPI in Ambivalence Indian Foreign Policy
  • GOIs preference would be keep IPI as low
    profile energy question kept in abeyance.
  • Foreign policy is mediating its policy
    posture.e.g Indian vote in IAEA
  • US concerns do impinge on it.
  • Progress on Indo-US Nuclear deal will bearing on
    the Indian ambivalence.

36
Essar abandons Iranian refinery plans 2 November
2007
  • The Essar Group has abandoned plans to develop a
    new oil refinery in Iran that would violate US
    sanctions on Tehran, Minnesota governor Tim
    Pawlenty said.
  • The move came after Pawlenty flew to India to
    discuss Essar's Iran work and potential conflicts
    with US law.
  • Essar, which recently bought a Minnesota steel
    company.

37
Indian Apprehensions
  • Economic decision making in Iran is highly
    politicized.
  • Indian Democratic Polity too has bearing.

38
India bitter on LNG Deal
  • Iran is not willing to supply the LNG at the
    contracted price of 3.215 per million British
    thermal units.
  • In June 2005, when the LNG deal was inked, the
    price of crude oil was 31 a barrel. Iran now is
    pressing for a price of 4.78 per mBtu.

39
The Prognosis
  • India will not kill the project but is neither
    desperate.
  • Given the emerging geopolitics of energy, in
    particular the hydrocarbons, India has wider
    stakes than country specific.
  • It is augmenting sourcing from other suppliers
    like Qatar, Bangladesh, Vietnam, Yemen possibly
    Saudi Arabia and Russia.

40

41
 
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