Indian oil minister to visit Pakistan, energy corridor high on agenda

Indian Petroleum Minister Mani Shankar Aiyar is to embark on the first concrete political and economic dialogue with Pakistan for opening up a corridor not only to source Iranian gas but possibly Central Asian energy supplies in the future.

Aiyar is scheduled to visit Pakistan on June 4-8 and the visit is seen as the first step to explore not only the feasibility of a tri-nation gas pipeline from Iran to India via Pakistan, but also the possibility of cooperation in oil and gas, including investment and trade opportunities.

Indo-Asian News Service Friday quoted a senior Indian Petroleum Ministry official as saying that this is the first in-depth dialogue between India and Pakistan over the issue.

After years of distrust, the dialogue is also seen as a positive move in bilateral relations between India and Pakistan, an outcome of the visit by Pakistani President Pervez Musharraf to New Delhi in April.

"The engagement is basically political. We have already had three rounds of talks with the Iranians, with considerable progress. But as the pipeline project is a tri-nation project, we need to engage with the third party," the official said.

On the political front is India's keenness to know the extent of Pakistan's commitment and the time line for the execution of the project. With Washington having expressed reservations over the project, India is keen to know Pakistan's response.

India is also keen to have an over-arching agreement between the three countries to provide a "political mandate to the project ".

The issue of security still surrounds the estimated 5 billion US dollars gas pipeline project, mooted around 15 years back, alongside the commercial viability even if technical issues can be resolved.

"On the commercial front, the crucial issue is to find out what Pakistan is thinking in terms of transit fee as also the cost of security, as the pipeline would pass through some geographically inhospitable territory," the official said.

The geopolitical situation in part of the terrain in Iran and Pakistan through which the pipeline is expected to cross is also causing some concerns, particularly due to the hostility of the local communities. All these will make the cost of security high and uncertain.

"It (the talks) is a good development. The gas pipeline from Iran is not the only one at stake but also other pipelines from Central Asia," said Saumitra Chaudhury, economic advisor with leading rating agency ICRA Ltd. and also a member of Indian Prime Minister's economic advisory council.

A breakthrough in the bilateral talks is expected not only to pave the way for the gas pipeline but also flow of Indian petroleum goods and petrochemicals across the border. It may also open opportunity for joint ventures and investments.

Source: Xinhua