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Pipe dream could bind India, Pakistan in peace

Energy experts reckon they have a $3-billion solution that could help end hostility between India and Pakistan.

A gas pipeline from Iran to India via Pakistan could help New Delhi meet its energy needs, bring Islamabad juicy transit fees and prod the poverty-stricken South Asian neighbours to transfer resources from defence to development.

The proposed 2,500-km pipeline from Iran, which has the world's second-largest gas reserves, is expected to be discussed at the India-Pakistan summit in the middle of July.

"It is a pipeline for peace. There is nothing better than an interlocking economic interest for the two countries," Tata Energy Research Institute director general R K Pachauri said.

But it is not easy for India to peg its energy requirements on an overground pipeline that passes through Pakistan, a country it accuses of fomenting rebellion against its rule in Kashmir and with which it has gone to war three times.

But unlike the bitterly disputed territory of Kashmir, where any concession would have enormous domestic repercussions, the pipeline proposal has tempting economic promise.

"This will be the measure of how far Vajpayee and Musharraf can change history," said Mahesh Rangarajan, a political analyst. "Both countries have a lot to gain from the pipeline."

Climate of trust required

But both countries will also need to establish a climate of trust to embark on a massive project which could cost as much as $4 billion.

"It is a chicken and egg situation. Pakistan's cooperation is vital for the success of the pipeline, it depends on the overall climate," Rangarajan said.

For more than a decade, energy-hungry India has contemplated importing natural gas from several countries, including Iran, Oman and Bangladesh.

US exploration firm Unocal Corp is pushing for a pipeline from Bangladesh, where it has found huge reserves of gas. But Dhaka has yet to decide whether it has enough gas to export without compromising on its own long-term energy needs.

Pachauri said India, which has a demand for 115 million cubic metres of gas a day against a supply of 65 million, should take advantage of Iran's hunt for a market for its massive gas reserves.

"The pipeline from Iran is clearly the most attractive option of all that are available. There are of course security concerns -- you could have terrorist groups who could blow up the pipeline -- but all these can be overcome," he said.

An official of India's petroleum ministry, who asked not to be named, said importing piped gas from Iran made economic sense, but geopolitical considerations were the big worry.

Deep-sea option

Pachauri, one of the architects of the proposal, said political risks could be easily overcome.

He said the pipeline should be financed by international stakeholders who can put pressure on Pakistan, which would in any case be inclined to protect a pipeline fetching some $400 million a year in transit fees.

Apart from meeting its own needs, India could use surplus gas for power plants to feed the grid across the border with Pakistan, and also liquefy it for export to Japan and Korea, which are large importers of liquefied natural gas.

"Such a mutually interlocking agreement would prevent Pakistan disrupting the supply of gas," he said.

Pakistan has said in the past that it has no objection to the pipeline running across its territory.

However, New Delhi is still considering the costlier option of a deep-sea pipeline that would circumvent Pakistan. Indian officials say a decision would be taken only after a year when feasibility reports on both routes have been completed.

Last month, Indian and Iranian officials discussed the two options at a meeting in New Delhi. They also agreed to set up a technical sub-committee to monitor the progress of work on the project which will have its first meeting in Tehran this month.

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