Gas pipeline project can extend to Southeast Asia: Iranian minister

By Vishnu Makhijani, IANS

New Delhi : A proposed pipeline project to transport natural gas from Iran to India via Pakistan could be extended to Southeast Asian countries, an Iranian minister says, expressing the hope that the first stage of the project would take off soon.

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Iran’s Minister of Economic Affairs and Finance Davood Danesh Jafari was also optimistic that the contentious gas pricing issue would soon be resolved and hinted at making large investments in India rather than parking his country’s huge foreign exchange reserves in foreign banks.

“We are very positive about the (Iran-Pakistan-India) pipeline because we firmly believe that it will have a regional impact,” Jafari told IANS in an interview. He was in India to attend the Partnership Summit 2008 in Gurgaon.

“We are positive we can take the pipeline to Southeast Asia, to countries like Thailand, Malaysia and Singapore,” the minister added.

“It is an important project and can be started after every aspect of it is resolved,” he said, adding talks between Iran and Pakistan had been concluded and that India and Iran as also India and Pakistan needed to sort out their remaining issues.

“When India and Pakistan complete their talks, we are positive we will be able to start (the project).

India had signed a deal with Iran in June 2005 for purchasing 5-million metric tonnes per annum (MMTPA) of liquefied natural gas (LNG) for 25 years at $3.215 per million British thermal unit (MBTU). However, the deal could not proceed as Iran insisted on renegotiating the deal.

The 2005 contract had linked LNG prices with the Brent crude oil price with a cap at $31 per barrel. Iran wanted to raise this ceiling to $55, upping the LNG price to $4.78 per MBTU.

Jafari defended the Iranian stand, saying what had been signed in 2005 was a memorandum of understanding (MoU) that had not been ratified.

“The price will be fixed according to what exists at the time of signing the agreement,” he added.

Speaking about Iranian investments in India, the minister said Tehran would utilise its burgeoning $60-70 billion foreign exchange reserves for this.

“Previously, we would deposit this money in foreign banks. Now, we think a better way is to invest this money in countries like India,” Jafari said.

He also saw the possibility of ramping up Iran-India trade from its current level of $1.7 billion with the opening up of the two countries’ economies.

“Iran was an oil-based economy. India operated in the socialistic pattern. The role of the two governments was huge. Now, both have opened up and the private sectors have a greater role to play. We are laying the foundation for this,” the minister stated.

At the same time, he maintained that trade could expand only if India resolved issues like double taxation and high customs tariffs.