Renewed interest in the Iran-Pakistan-India (IPI) gas pipeline has surfaced amid the Joint Plan of Action (JPOA) agreement outlined by the P5+1 with Iran.
Earlier this month, a Pakistan delegation met in Tehran to discuss the status of the pipeline’s deadline. The negotiations over a new deadline come as Pakistan has yet to complete the 700-kilometer pipeline linking the existing 900-kiolmeter pipeline Iran built as part of the deal.
The preliminary agreement outlined by Iran and Pakistan in 1995 set the deadline for December of this year. Under the agreement, failure on Pakistan’s part to complete the pipeline would result in a $1 million per-day fine until the pipeline was completed. However, Iran agreed not to penalize Pakistan in anticipation of the pipeline being operational with Iranian gas flowing into Pakistan sometime in the near future. This optimism was emboldened recently as the negotiations concluded with Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi in Islamabad, on Tuesday, indicating all efforts to meet the deadline will be exercised.
The other geopolitical puzzle to this grand-pipeline-deal, and perhaps the most controversial, is India’s stake in Iran’s energy. The idea for extending the Iran-Pak pipeline into India came in February of 1999 when an accord between Iran and India was signed. However, as tensions arose over Iran’s nuclear program, India backed out of the deal in 2009 amid US pressure.
Yet there has been a renewed interest on India’s behalf following the interim agreement in Geneva. The JPOA relaxes, “a number of sanctions on Iran, including the one which does not require countries like India to reduce imports of oil from Iran to avoid American sanctions.” Additionally, recent reports indicate India increased its crude oil imports from Iran by 35% in December of last year. Furthermore, with ongoing talks between Iran and India over the IPI gas-pipeline or the possibility of an alternative route under the Sea of Oman, India’s interest in gaining access to not only Iran’s crude oil, but natural-gas reserves, appears mutual.
But as all pipeline projects devised in volatile countries warrant criticism, many observers of the proposed pipeline claim such a project to be a pipe-dream. With the uncertainty looming over Iran’s commitment to the JPOA, Pakistan’s dependence on US foreign aid/security – let alone US stance on the pipeline itself – and with India-Pak relations historically strained, all signs say they are right.
Nevertheless, what is clear, since the Geneva I agreement, Iran has and will continue to aggressively pursue access to regional markets for their energy sector. And despite US warnings Iran is not “open for business”, global demand from US allies and the Far East make such a position untenable for the US.