India-Iran gas pipeline project: International consortium company likely

New Delhi: At the conclusion of the two-day first India-Iran Special Joint Working Group, the Iranian Deputy Petroleum Minister for International Affairs, M.H. Nejad Hosseinian, has said that the framework of the proposed pipeline outlining the roadmap for completion of the project is likely to be finalised by December end.

The framework will also indicate whether each country would go separately in the project or an international consortium company would be floated for the purpose.

Agreeing that the project cost had gone up by 20 per cent to 30 per cent from the initial estimates because of higher steel prices, Hosseinian, however, reiterated that the project was the cheapest and the best way for assuring energy supplies to India and Pakistan. Optimistic about meeting the time frame for commencement of the project, he said gas supplies to both India and Pakistan could commence within five years of signing of the pact between the three countries.

"The designing of the pipeline would take 12-18 months after the appointment of international consortium and construction will take another four years thereafter," he stated. The proposed pipeline is expected to have a capacity of 140-150 million cubic metres (mcm) of gas per day. This would be shared between India and Pakistan. While India has indicated it would buy 60 to 90 mcm per day, Pakistan is looking at buying 10-60 mcm per day, he added.

Meanwhile, India is planning to appoint a financial consultant for the project and will follow it up by appointing two separate legal and technical consultants, said Talmiz Ahmed, Additional Secretary for International Cooperation, Ministry of Petroleum and Natural Gas. He, however, clarified that the financial consultant will play the main role in framing the roadmap for the project. "GAIL (India) Ltd and Indian Oil Corporation will appoint legal and technical consultants to the project. Since our companies have the technical expertise, we may not need outside technical consultants," he added.

An Indian technical team would visit Tehran later this month to review the pre-feasibility report on the project, prepared by National Iranian Gas Export Co and BHP Billiton Plc. "The next meeting of the India-Iran joint working group will be held in Tehran in September," he added.

On the basis of the recommendations of the financial consultants, there would be a preliminary understanding on the preferred project structure by early November 2005. Once there was agreement on the project structure between the three countries, the trilateral framework agreement would be finalised by the end of this year, he said.