India to feel 'little impact' of failed Iran gas deal
India would bank on a slowdown in the global economy and a resulting abundance in LNG consignments to offset the impact of Iran-India gas deal breaking down, authorities once closely involved with the deal have said.
"The impact may be a little less on us due to a global meltdown leading to a slight slowdown in the Indian economy. Due to a recession in the developed world, the prices of crude and LNG are expected to fall to 2004-05 level and the availability will also improve. No serious difficulty is envisaged in India accessing its energy resources," said S C Tripathi, former Secretary in the Ministry of Oil and Natural Gas, the Government of India.
Iran has backed out of a deal to supply Pakistan and India with natural gas, Pakistani media reported recently. There have been no official confirmations of the deal breaking down from India, Iran or Pakistan. Iran wanted new negotiations over prices before commencing construction of the $7.6 billion (Dh27.9bn) Iran-Pakistan-India pipeline, a Pakistan- based newspaper reported.
While Iran was demanding a price of just over $ 8 per million British thermal units (mmbtu), India was willing to pay $ 4 per mmbtu. Spot prices for gas stood at $6.75 per mmbtu on Wednesday.
Tripathi maintains that the deal was never serious enough to face a breakdown. "It (Iran) has indeed walked out from a legally enforceable deal signed in June 2005 for supply of five MTPA of LNG to Indian state entities. So far a deal not having been negotiated, and much less contracted, Iran being in or out is both taken with a pinch of salt," he said.
The Iran-Pakistan-India gas pipeline, called the 'Peace' pipeline, is a proposed to run over 2,775 kilometres. It was meant to supply natural gas from Iran to Pakistan and India. Iran is said to be interested in including China in the project.
The project was expected to meet rapidly increasing demand for energy in India. The world's second most populous country is predicted to more than quadruple its gas requirements in the coming years. India's hydrocarbon vision 2025 sets out India's gas requirements in stark terms. The country will require 146 billion cubic metres (bcm) of gas per annum by 2025, up from 33 bcm per annum in 2005.
India has been increasingly relying on gas as it struggles to meet two objectives. A rising need for energy and a demand for clean fuel. The country's apex court directive forced the government to change the engines of all public transport vehicles to CNG run in late 1990s. About 10 per cent of the country's power output come from gas-run plants.
The country has increasingly looked for strengthening its relations with gas majors. Indian Prime Minister Manmohan Singh recently visited Qatar, the largest exporter of LNG in the world. India is scouting for gas in its own territory and in that of its neighbours Bangladesh and Myanmar. "Energy security remain a key agenda of our diplomacy. And with countries like Qatar talks get down to energy security even if the top agenda seems different," said a senior official at the Indian embassy in Qatar.