Russia's Gazprom is said to be backing a plan to pipe Iranian gas underwater to India, taking advantage of new technology developed for its Blue Stream pipelines, which run under the Black Sea to Turkey. One advantage for Russia is that it may reduce competition for the Turkish market by steering Iran's gas to the east rather than west.
Boston, 9 August 2002 (RFE/RL) -- Russia's gas monopoly Gazprom has reportedly proposed building an undersea pipeline to pump gas from Iran to India, using the experience gained from its massive Blue Stream project across the Black Sea.
Gazprom has approached Pakistan about the plan, because the pipeline would pass through its waters. Pakistan's Ministry of Oil and Natural Resources has asked the government to allow Gazprom to start preparations, ITAR-TASS said, quoting Pakistani reports.
The Russian gas giant estimates that it can cut the cost of the Iranian project to $3.2 billion as a result of its work on the Black Sea pipeline, "The Hindu" Indian daily reported. The $2.5 billion Blue Stream project to Turkey includes the two deepest underwater pipelines in the world.
Gazprom reportedly hopes to underprice plans for an overland line through Pakistan by nearly $1 billion. The scheme is one of three strategies for supplying Iranian gas to India that have been debated for years.
In addition to the Arabian Sea route and the overland pipeline, Iran has studied making shipments of liquefied natural gas from its huge South Pars gas field in the Persian Gulf. But the indecision over which course to take has plagued all three projects for just as long. One of the biggest barriers to a breakthrough has been distrust.
Pakistan has repeatedly assured Iran and India that it will not interfere with gas transit, but five decades of conflict over disputed Kashmir have given New Delhi little faith in the plan. Gazprom has reportedly argued that if lines are laid in deep water, they will be far less vulnerable to interference or terrorist attacks.
Gazprom's new push for the undersea-pipeline plan, first proposed in 1997, seems to be in direct response to Turkmenistan's bid to build a competing pipeline to Pakistan through Afghanistan. Turkmen President Saparmurat Niyazov has sought support for the 1,460-kilometer project, which was dropped by the U.S.-based Unocal oil company in 1998 because of sanctions against the Taliban.
Like the Iranian projects, the Afghan pipeline has always included the option of an extension to India, leaving it with the same problem of trust. The construction from Turkmenistan's Dauletabad gas field to Pakistan alone was expected to cost between $2 billion and $2.5 billion when it was estimated six years ago. Supporters of the route are using the same numbers now. U.S. officials have said that Washington would support a "commercially viable" plan.
Niyazov initially invited Gazprom to join the Afghan project, but the company has appeared to cool on the idea. Gazprom, which is 38 percent state-owned, now seems to be pushing for the Iranian deal instead.
Julia Nanay, director of the Petroleum Finance Company, a Washington-based consulting group, said, "There's no room for both." The market is unlikely to merit two such pipelines at the same time.
Nanay said that Gazprom may try to involve Italy's ENI oil company, which is the joint venture partner in the Blue Stream project to Turkey. It is ENI, and not Gazprom, that has the technology and equipment to lay the deep-water line. Blue Stream is scheduled to start pumping Russian gas to Turkey in October.
But Gazprom's possible reason for helping Iran may be the most interesting part of the plan. "The Hindu" noted that the company's proposal would "channel Iran's growing gas exports from the huge South Pars fields to India and Pakistan, leaving the Turkish market to Gazprom."
Iran has been pumping small amounts of gas to Turkey this year under a 25-year deal that was supposed to be worth more than $20 billion. But Russia is Turkey's dominant supplier, and economically strapped Ankara is believed to be taking only a fraction of the Iranian gas that it promised to buy.
Directing Iran's gas toward India may be a way to safeguard Russia's investment in Blue Stream. Turkey is also seen as a transit route to Europe, all the more reason for Russia to steer Iran's gas east while its own gas goes west.
In the absence of Gazprom, Niyazov has turned to the Russian gas trader Itera and the state-owned oil company Rosneft for help with the Afghan pipeline. On Thursday, they agreed to conduct a feasibility study on rebuilding Afghanistan's gas industry. It is unclear whether their involvement will give Russia a way to cover its bets.
But until trust can be established between India and Pakistan, all the plans may remain under a cloud, since it will be hard to assess the risks and returns of pipelines to either country or both.