Ipi Energy Security & Strategic Conflicts

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;...