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Analysis: IPI faces dangers, hurdles

disclaimer: image is for illustration purposes only
by Krishnadev Calamur
Washington (UPI) Jan 31, 2008
India's decision to proceed with talks with Pakistan on transit fees for the $7.4 billion, 1,700-mile natural gas pipeline from Iran is fraught with strategic and diplomatic implications.

Talks have been deadlocked for months on two issues: the cost of Iranian gas and how much India will pay Pakistan in transit fees. The pipeline would supply both countries with gas: India with 90 million cubic meters per day and Pakistan 60 million cubic meters per day.

Indian Petroleum and Natural Gas Minister Murli Deora is expected to visit Pakistan next week to discuss the transit-fee issue. If all goes well, the three countries involved -- Iran, Pakistan and India -- will meet in Iran Feb. 12 or 13 for discussions that could seal the deal.

India and Pakistan are split on how much New Delhi will pay Islamabad for the use of Pakistani territory for the passage of the pipeline. India says it will pay 20 cents per million British thermal units; Pakistan wants 49.3 cents per mBtu. The two sides have an agreement on the transportation tariff for the gas, however. Then there is the price of Iranian gas. By the time it comes to India, the gas will cost more than $7 per mBtu -- because of the transit fees -- a price New Delhi says is too high.

Economically rising India has little choice, however. With few exceptions, it has been unable to secure long-term supply contracts, forcing it to pay more for gas on the spot market. Countries such as Iran and Myanmar, which face international isolation, seem to be the only options to secure long-term contracts. There, too, India faces stiff competition from China, which needs energy to fuel its own rapid economic growth.

The three pipelines India is considering all come with their own risk. Myanmar is being actively wooed by China. A plan to pipe gas from Turkmenistan via Afghanistan and Pakistan faces serious security problems in the latter two countries. And the IPI pipeline faces U.S. opposition and security concerns.

Pakistan's government has assured the security of the pipeline, but that would count for little given the political situation in that country these days. The United States, which is closer to India now than at any time since 1947, when India became free of British rule, opposes the deal because, it says, the project will embolden Iran's rulers. Washington is trying to apply pressure on Iran to end its nuclear program, which it says was being used to make weapons; Iran denies the charge.

If India goes ahead with the IPI deal, the U.S. Congress is likely to react -- and not too kindly. There is already some unease that India is being granted a special exemption by the United States in the form of a civilian nuclear cooperation deal though New Delhi possesses nuclear weapons and has refused to sign the nuclear nonproliferation treaty; a deal with Iran is only likely to make things worse in Congress.

If India does not sign the deal -- even if it's for practical reasons such as security considerations or the price of gas -- the government's communist allies are likely to excoriate it for succumbing to U.S. pressure and accuse it of abandoning an independent foreign policy.

Still, there is hope for India. Iranian authorities still need to clear the deal and in the past Tehran hasn't been shy about changing its mind on energy deals and prices it views as unfavorable. Pakistani news reports say that Iran will only sign a final deal following Pakistan's parliamentary elections next month, which would bring forth a new government.

A month is a short time, but unlikely to produce a deal, first conceived in the early 1990s, to carry gas from the world's No. 2 producer to the world's second-most populous nation. Until then, India needs seriously to examine other energy options.


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Outside View: Oil firms boom on Iraq war
Hastings-On-Hudson, N.Y. (UPI) Jan 28, 2008
As ExxonMobil prepares to celebrate what could be a record profit of more than $10 billion for the last quarter of 2007, jubilant company officials and stockholders might want to join in a moment of silence for the more than 1 million war dead in Iraq -- Iraqi and American combined. They paid the ultimate price in a war in which ExxonMobil has had a hand and which we can estimate is responsible for at least $2.5 billion of ExxonMobil's latest profit. (Nick Mottern is the director of and has worked as a reporter for the Providence (R.I.) Journal and Evening Bulletin and the former newsletter Consumer News; as a researcher and writer for the former Senate Select Committee on Nutrition and Human Needs; as a lobbyist for Bread for the World; as a writer and organizer for Maryknoll Fathers & Brothers; and as an organizer in New York's Hudson Valley. He is a member of the board of Traprock Peace Center in Greenfield, Mass.)

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