Progress on Iran-Pakistan-India (IPI) gas pipeline, also known as ‘Peace Pipeline’, has been inching forward
since its inception in the early 1990s though much ambitious and dynamic rhetoric has been in action after the
revival of negotiations in February 2004. The US$ 7 billion (a re-estimated project cost), 3,000-kilometer
pipeline venture, after originating from Iran’s southern port city of Asalouyeh and traversing through the rugged
and restive provinces of Balochistan and Sindh in Pakistan, would see its final destination in New Delhi and
Mumbai in India. All the three countries are currently hammering out contentious issues like gas prices,
transportation tariffs, pipeline security and the latest snag, Iran's right to review the gas price.
During talks in July 2006, negotiations stalled when Tehran demanded a higher price per mBtu (million British
thermal units) against what New Delhi and Islamabad had to offer. Even after India and Pakistan agreed to pay
US$ 4.93 per mBtu this February, Iran insisted that the countries should understand ‘market realities’ when
dealing with such a long-term project, arguing that prices should be reviewed every three years. India and
Pakistan, nonetheless, wanted US$ 4.93 per mBtu to remain basis of pricing of natural gas for the entire 25-year
duration of the contract. As per the proposed contract, 60 million metric standard cubic meters of gas per day
would be available to India and Pakistan (split equally) in the first phase of the project.
India, Pakistan and Iran started a final round of discussions on June 27 in New Delhi to resolve differences on
the pipeline before the three nations could sign a final deal. Price revision clause (asserted by Iran) remained
contentious whereas Pakistan and India agreed on transportation tariff of 0.70 dollars per mBtu, demanded by
Pakistan;...
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