Agreement on IPI gas pricing
27 January, 2007
By Anwar Mahmood
The auspicious news of Iran, Pakistan and India arriving at agreed price for gas delivery to Pakistan and India from Iran opens up a whole new chapter of energy relations between the three Aryan nations. The news has added impetus bonus of a whole new peace equation being formulated in Tehran for the people of south Asia.
Iranian gas is best fit suited for south Asia due to easy land route through much shorter distance. The gas reserves of India and Pakistan are between 25-30 trillion cubic feet each and would barely meet the demand in future. Iran's current reserves of over 1000 trillion cubic feet plus some more new discoveries adding up daily are the best hope for energy starved south Asia as well as China.
Gas will be desperately needed for fertilizers production in India and Pakistan.
Iran is planning to triple its gas production from 2.8 trillion cubic feet per year to over 8 trillion cubic feet per year over the next six years. Given the capacity of 1.8 trillion cubic feet per year, IPI will transport 150 million cubic meters per day.100 million cubic meters per day or 1.2 trillion cubic feet per year will be on some what low side for 56 inch diameter world class pipe line. This pipe line will join the ranks of Alliance pipe line between Canada and US or Alaska pipe line or the pipe line transporting gas from Russia to Europe.
The gathering systems or pipe lines and the gas purification plants will be in Iran, and Pakistan and India will have the clean 56 inch dia sales gas pipe line bringing Iranian gas. Pakistan and India will have the easy pipe maintenance protection job of caring about the external of pipe through pipe coating and cathode protection.
The pricing agreement is in the interest of all three nations as they embark on gas energy alliance. This will not only cement the three nations together for common peace through cohesive buttressing with each other by the three nations. The status of peace between India and Pakistan has already been exercising quantum jumps into positive and safe territory. This gas energy marriage between the three nations will bring them more closely and also impart the sense of resolving any outstanding issues through peace and peace only.
Iran will have technical challenges as the job will be massive. And Iran, with the help of Shanghai accord, will have to keep out any new rules imposed by certain parties, who are always looking for excuses to blot out the scope of the soft nature of recent sanctions, which have no reason to interfere in this IPI project. Some sanctions regime is feeling not happy by putting all the eggs into the agreed upon soft sanctions and has hinted of finding a new basket, which should really not exist at all.
The gas price is right, the propensity of consumption and demand is there along with mega supply, and the peace mood is there between all three parties. There simply is no room for the spoils or the spoilers.
Development capital can come from China with its biggest cash reserves in the world. Even Europe is interested in supplying the development capital. The world's best gas technology is in Germany and not in America, though Americans are the best and biggest in refinery business with their companies like Fluor, UOP, Foster Wheeler, Bechtel and others. But for gas industry German Linde and others are the best in the world.
The gas price at 4.5 USD per 1000 cubic feet or million BTU, the gas sales will be over 8 billion USD annually for IPI pipe line. Let’s assume that gas price is between 4 to 5 USD per 1000 cubic feet and the exact numbers will soon be flashed out to make them public from confidential.
And Iran will have to grapple with challenges pertaining to development capital and engineering, which is much softer in nature compared to oil refining. Through my some experience for Qeshm energy in Iran, where the world's largest gas field is, I found from field data that Iranian gas is much less sour than north American or Russian gas. The gas is much easier to purify with lesser of hazards due to very low hydrogen sulphide in it.
But, time factor is always there. You cannot do every thing overnight. Even Alliance pipe line job for transporting gas from western Canada to America's industrial heart at Chicago took years before the Americans saw gas from Alliance pipeline.
There is required more of good will between the three friends to sustain it all as some Kaidos(of epic Heer Ranjah story) will be hovering around.
But, there is help around and lots of it is there from Shanghai accord to sail the project smoothly. Most important, India and Pakistan are singing peace together.
IPI is peace energy project that will stress relieve the moods and modes of frictional flux from elsewhere.
The time is around the corner when the nations sharing much in ethnicity, culture and history will sing peace through the gas energy marriage.
The world can join us for global peace.