India, Iran Mulling Undersea Gas Project

SOURCEInSerbia

As Iran’s re-engagement with the international community promises both more opportunity and more competition for India, a section of the Indian intelligentsia has raised two important questions: Is Iran’s comeback a double-edged sword for the South Asian country and what does this new Iran really mean for India? However, there are no clear answers.

Indian policymakers have a different plan for Iran. The Narendra Modi government in New Delhi wants to enjoy benefits from a more open Iran as much as it can. With the West Asian nation saying ‘no’ to hardliners in recent Parliamentary Polls, India has once again started planning to do “business” with its old friend. Indian has urged Tehran to build an undersea gas pipeline that will allow New Delhi to import gas from Tehran, bypassing Pakistan.

The Modi government has said in a statement that officials of major Indian gas buyers will soon visit Iran to discuss the long-proposed undersea pipeline project. New Delhi believes that it is an alternative to a similar project via Pakistan. According to the statement, executives of Gas Authority of India Limited (GAIL) and Indian Oil Limited (IOL) will also discuss the price of gas with Iranian officials during their stay in Tehran.

A senior Indian official told the press on Sunday that the proposed pipeline would pass through the Sea of Oman and the Arabian Sea. He also said that the project, worth USD 4.5 billion, would help India receive up to 31 million cubic meters of gas per day in the coming years. If Iran refuses to accept the proposal, India will try to use the existing 1,400-km-pipeline for importing gas from Turkmenistan.

The official stressed that there would also be a third option for India. Turkmenistan will transfer gas to Iran and Iran will deliver the same amount of gas to India under a swap deal. In that case, Oman might join the pipeline project at a later stage and make it a trilateral initiative mainly because of its geopolitical proximity to both India and Iran.

Meanwhile, Indian officials are hopeful that Iran will come back with a positive response for the proposed undersea gas project, as recent Parliamentary Election in the West Asian country has offered the world a window to the workings of Iran’s unique brand of democracy. India is not ready to see the election as a dichotomous fight between moderates and hardliners. New Delhi is of the opinion that the victory for the moderates has strengthened President Hassan Rouhani’s hand at world forum. Domestically, President Rouhani’s challenge will be to position the Iranian economy in such a manner so that it can gain from the lifting of economic sanctions by the West. As President Rouhani is expected to help bring peace and stability to the region, India thinks that it is the right time to strengthen trade ties with Iran.

Since 2014, India, buoyed by the economic pitch of Prime Minister Modi, has been in the global economic spotlight. With Iran boosting its oil production and exports amid a global supply glut, major crude oil importers, like India, will surely benefit from the cheaper oil. Cheaper oil will help India to reduce its import bill, and trade and current account deficits. The Modi government has already taken the opportunity to hike excise duties on fuels. The move is expected to yield additional government revenue at a time of fiscal consolidation.

LEAVE A REPLY