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Gas line to India may be a pipe dream

Raymond Thibodeaux Nov 3, 2009

Gas line to India may be a pipe dream

Raymond Thibodeaux Nov 3, 2009


Steve Chiotakis: As countries search for cleaner energy sources, demand is rising for natural gas because it’s seen as a clean-burning fuel. In South Asia, there’s not enough power to go around — clean or otherwise. So, India is hoping to get natural gas shipped in from Iran. But there’s one big obstacle in the way. Raymond Thibodeaux reports from New Delhi.

Raymond Thibodeaux: India’s energy needs are growing faster than its population. Natural gas is cheap right now. And Iran has plenty that it wants to sell. So, a 1,700-mile gas pipeline is being proposed. It would run down from Iran through Pakistan and into India, linking cities like Islamabad and Karachi to Mumbai and New Delhi. With so many winners, analysts say regional goodwill would also flow from the pipeline.

LYDIA POWELL: It was thought of as a peace line.

Lydia Powell is an energy market expert with the Observer Research Foundation. She was talking to me in a dark conference room during one of Delhi’s many power outages. Blackouts are a fact of life in India and Pakistan. Yet the two neighbors can’t come to an agreement over the pipeline.

POWELL: There is a very good economic case. Both countries will benefit. Pakistan, in fact, needs the gas much more than India.

Not only would Pakistan have access to the natural gas, it would also collect about $100 million each year from India in right-of-way fees. Still, many analysts say the plan looks better on paper than it does on the ground.

Ajay Sahni is director for Delhi’s Institute for Conflict Management. He says India and Pakistan have a large, complex relationship that includes politics, economics and war, and the pipeline is a tiny part of that.

AJAY SAHNI: It is not so pivotal to either country that they would not redefine their strategic relationships one with the other simply to realize this pipeline.

Decades of animosity between the two nuclear-armed neighbors intensified after last year’s terror attack in Mumbai. India is convinced the militants who carried out that attack were trained in Pakistan. Sahni says militants could sabotage the pipeline as a political weapon against India.

SAHNI: The pipeline would in fact make India subject to constant Pakistani blackmail.

India is also concerned about the high fees Pakistan’s charging for the pipeline’s right-of-way. Pakistan says that $100-million price tag is mostly to provide security in dangerous areas along the pipeline’s route.

Still, the two neighbors are hopeful they can work out a deal to get the Iranian natural gas. But some analysts say the pipeline is starting to look more and more like a pipe dream.

In New Delhi, I’m Raymond Thibodeaux for Marketplace.

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