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News number: 8711041059

20:28 | 2009-01-23

Economy

نسخه چاپي ارسال به دوستان

Report: India to Face Energy Crisis without Iranian Gas Supply

TEHRAN (FNA)- India could face an acute shortage of natural gas if the proposed pipeline from Iran and Turkmenistan are scrapped due to deteriorating relations with Pakistan, an Assocham study warned.



As the political tension with Pakistan heightens, disrupting the gas pipeline talks, the clean energy option for the Indian economy can become all the more challenging with demand and supply gap widening at 5.7 per cent, the study said.

Energy-hungry nation needed the Iran-Pakistan-India and Turkmenistan-Afghanistan-Pakistan-India pipelines as the indigenous production target of 42.28 billion cubic meter for the fiscal year was likely to be missed, Assocham claimed.

"Scrapping the two proposed international gas pipelines involving Pakistan could aggravate the already grim gas supplies. The long run loss on the supply side of natural gas could range between 45 billion cubic feet per day (bcfd) if India opts to de-link itself from these projects," it said.

India's current gas availability of 104 million standard cubic meters per day (mmscmd) meets only 60 per cent of the industrial demand. This gap is projected to widen by 2011-12.

"The demand is likely to be pushed rapidly from the power and fertilizer sectors along with the city gas distribution system," it said.

"India needs to ensure smooth natural gas supply to its industrial units in the power and fertilizer sector which would supplement the rising demand from the primary and secondary sector to keep the Indian economy growing at a robust pace," it added.

Iran and Pakistan initiated a Gas Sales Purchase Agreement earlier this year.

On April 30, Ahmadinejad met Indian Prime Minister Manmohan Singh and said that the two sides had decided to address the issue in 45 days.

Indian and Pakistani officials also announced earlier this year that they had resolved almost all bilateral issues including transit fee which saw New Delhi boycotting IPI pipeline talks for about a year.

In June, Pakistan Foreign Minister Shah Mahmood Qureshi, who met New Delhi's Oil Minister Murli Deora said that the two sides have resolved all bilateral issues.

India has more or less agreed to give Pakistan a transit fee of $200 million per year, which is equivalent to $0.60 per million British thermal unit for allowing passage of the pipeline through that country.

India and Pakistan finally agreed in February 2007 to pay Iran $4.93 per million British thermal units ($4.67/GJ) but some details relating to price adjustment remained open to further negotiation. There was a breakthrough in the talks in April 2008 when Iranian President Mahmoud Ahmadinejad visited Pakistan and India.

According to the project proposal, the pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.

The gas will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 billion cubic meter of natural gas per annum, which is expected to be later raised to 55 billion cubic meter. It is expected to cost $7.4 billion.

According to Indian ministry sources, the IPI gas pipeline is quite crucial for New Delhi as after signing of the agreement, 60 million standard cubic meters per day (mmscmd) of gas is expected to be supplied in phase-I, which will be shared equally between India and Pakistan.

In phase-II, 90 mmscmd of gas will be supplied to India and Pakistan. So far six meetings of the trilateral joint working group (JWG) of the participating countries have been held with the last meeting being held in New Delhi on June 28-29, 2007.

India, Asia's third-largest economy, can produce only half the gas it needs to generate electricity, causing blackouts and curbing economic growth. Demand may more than double to 400 million cubic meters a day by 2025 if the economy grows at the projected rate of 7 to 8 percent a year, according to the Indian oil ministry.

Iran plans to start exporting gas to Pakistan in 2011. Iran has completed half the pipeline, which can carry 110 million cubic meters of gas a day, National Iranian Gas Company (NIOC) said in April. India uses about 108 million cubic meters of gas a day, according to a BP Plc report.