Basic , Financial and Risk Aspects

Of Iran India gas Pipeline

Prepared by
Rohil Bhat
(251017)
Sashidhar Bodepalli (251020)
RajGopal A
(251003)
Nilesh Bhagwat
(251046)
Shivananda Dasare (251031)
Bhagyesh Ghule
(251051)

Briefing about the Project

Iran-Pakistan Gas Pipeline between energy deficient India and
energy rich Iran is a feasible and doable project, but it has
been lingering since 1995 when an MOU was signed to
construct the pipeline between Pakistan and Iran.
The project was designed to deliver natural gas from Iran to
Pakistan and India. The 2775 km (approximately 1100 km in
Iran, 1000 km in Pakistan and 600 km in India) long pipeline
was proposed to emanate from South Pars gas field and pass
through Bandar-Abbas, Khuzdar, Sui to Multan and then to
Delhi, at an estimated cost of US $ 7.5 billion.

Details about the Project

Country: Iran, Pakistan, India
From: Asalouyeh (South Pars gas field)
Passes through: Bandar-Abbas, Iranshahr, Khuzdar, Sui,
Multan
Type: Natural gas
Partners: National Iranian Oil Company, Sui Northern Gas
Pipeline Limited, Sui Southern Gas Company Limited
Expected: Mid 2015
Length: 2,775 kilometers (1,724 mi), From Iran side 1100 Km
(730 miles) ,Pakistan 1000 Km and India 600 Km

Details about the Project

Discharge: Initially 22 billion cubic meter per year (21.5 million
cubic meters per day) (750 million cubic ft), Will be raised up
to 55 billion cubic meter per year
Diameter: 48 inches (1,219 mm)
Estimated Cost: US $ 7.5 billion In Khuzdar a branch would
spur off to Karachi. From Multan the pipeline may be
expanded to Delhi
Alternative Rout proposed by India: Iran to the maritime
boundary between India and Pakistan off Kutch. From there
one branch to run to Pakistan while other branch to run to
Kutch

Look over Financial Feasibility

The National Bank with many other commercial banks as India
and Pakistan will contribute $190 million, or 51 percent, to
the equity structure.
The project is planned to be funded at a debt equity ratio of
70:30 requiring an equity investment of $373 million and debt
financing of $872 million. SSGC, SNGPL, OGDCL, PPL, PARCO
and NBP - whose contribution will be $190 million or 51% of
equity structure as well as potential private investors
including Petronas and Gazprom - whose contribution will be
$183 million or 49% of the equity structure.

Look over Financial Feasibility

The contract had been awarded to ILF Consulting Engineers of
Germany for consultancy on Iran-India gas pipeline project to
undertake project feasibility. The ILF will also work in joint
venture with Pakistan engineering consultancy agency,
National Engineering Services Pakistan Limited (Nespak).
The ILF will undertake feasibility study, Environmental Impact
Assessment, FEED and supervision of detailed route survey.
The overall cost of services, through the international
tendering, received by ILF for both stages, amount to 48.9
million dollars -15.5 million dollars for stage-1 and 33 million
dollars for Stage-2 against the second lowest bidder, Worley
Parson's 138.7 million dollars.

Look over Risks and Obstacles

Many in Pakistan believe that the price that Iran is charging
for gas will make the project economically unviable.
The pressure from the United States to abandon the project
remains as strong as ever, and if the confrontation between
the US and Iran over the nuclear issue intensifies, Pakistan will
find it difficult to move ahead with the project.
Iran and Pakistan are hoping that India will join the project
sooner rather than later, but India has reservations over the
pricing of the gas.
New Delhi's concerns over ensuring the security of the
pipeline in Pakistan's restive Balochistan province also makes
it difficult for India to accept the deal in its present version

Paks demands more.

Pakistan's growing energy needs and Iran's pool of energy
resources make the two states natural economic partners, and
served as the impetus behind the proposed gas pipeline,
initially DID NOT planned to include some parts of India as
well and only those would be covered accorind to Paks
interests
Pakistan's annual royalties from this project are expected to
be between $500 million and $600 million. The project, if
finalized, would also represent a major boost to Iran's efforts
to prevent its global isolation and economic marginalization
Production stands at 4 billion cubic-feet per day, while
demand stands at around 4,800mmcfd, according to some
estimate. Pakistan seeks to import 750mmcfd from Iran.

Pipeline politics
US is rebranding its relationship with Pakistan by placing new
emphasis on civilian energy investment. US Assistant
Secretary of State Robert Blake announced that Washington
had advised Islamabad to seek alternatives to the proposed
Iran-Pakistan pipeline.
For the proposed pipeline signed between Islamabad and
Tehran last, Iran will supply 750 million cubic feet a day of gas
to Pakistan for 25 years. Blake explained that owing to the
ongoing dispute between Tehran and the international
community regarding Irans nuclear ambitions, the US is
opposed to any large investments in Iranian projects.
This is yet another issue on which the Obama administration
is echoing the views of its predecessor, George W. Bush.

Chinese Interests in the IPI Pipeline

The most interesting aspect of Irans most recent
announcement is that China has yet to comment publicly on
the pipeline except that it is studying the Pakistani proposal.
Islamabad desperately needs the gas that might not come
otherwise if there is no third party to make the deal profitable
to Iran.
It would gain much revenue from the transit fees for the gas
going to China and benefit considerably from the ensuing
construction of infrastructure within Pakistan.
it would further solidify its all-weather relations with China.

Pipeline of Pipe dream ??

If all or most of the Iranian gas is used for the power sector, as
stated by the government, then our energy mix will remain
lopsidedly dependent on imported fuel.
But situations, particularly in the extended Southwest Asian
region, dont always follow economic logic; instead, they are
determined by politics, strategic interests, rivalries and
conflicting views.
Since the pipeline project presently concerns Iran and
Pakistan, it would be better to comment on the nature of PakIran ties and whether or not moving forward with pipeline will
also move forward the somewhat troubled relationship
between the two states.

Pipeline Peace
While Iran has the worlds second largest oil and natural gas
reserves, India is the worlds fifth largest energy consumer
and imports 75% of its needs, accounting for 3.5% of global
energy consumption. The trade between India and Iran, is
around $15 billion.
The answer to all the problems lies in how we read the nature
of this relationship and how it is likely to develop in the
context of the larger context of power between a variety of
players Iran, Afghanistan, Pakistan, India and the United
States.

THANK
YOU