Analysts say that a proposed extension of Iran’s subsea natural gas pipeline that it is constructing to Oman further to India is fraught with risks, both economic and from the security viewpoint, apart from other concerns.
First, cross-country pipelines involve huge costs, and past attempts have seen limited success. Second, analysts said, India’s dependence on Iran for energy needs will attract security and geopolitical concerns including economic sanctions imposed by other countries.
Iran’s deputy foreign minister Mahdi Safari, on a visit to Mumbai last week, said the Islamic Republic may consider extending its pipeline to the Gujarat coast. To be sure, this is not the first time such a plan has been mooted but “the plan also hinges on India’s interest,” said a person aware of the developments.
Also Read: Iran in talks for $4.5 bn undersea gas pipeline to Gujarat
“It is an interesting development but (I am) not sure if it will culminate in anything material,” said Vivekanand Subbaraman, an analyst with Ambit Capital. His scepticism is not unfounded, since such projects have been proposed before.
According to the last available information on public record, the ministry for petroleum and natural gas in a reply to a query raised in the Rajya Sabha in March 2021 said, “India was involved in discussions in the past on the India-Iran pipeline project. However, work has not started on the pipeline yet nor has any plan been finalised.”
Iran was ranked as having the third-largest oil and second-largest natural gas reserves in 2021, according to data from the US Energy Information Administration. Between April 2022 and January this year, India imported 16.99 million tonnes of liquefied natural gas, none of which came from Iran.
Another analyst with a domestic brokerage firm called the plans “good on paper”. “This a lot more expensive and has been talked about earlier. We need to see if it moves from media to implementation this time,” said the analyst, who did not wish to be identified. In 2014, news reports estimated the cost of an India-Iran pipeline at around $4.5 billion.
The India-Iran pipeline project is not an outlier. A decade after it was conceptualised, the fate of another ambitious undertaking, the $7.7-billion plan to connect India through the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline (TAPI), also remains unclear. The TAPI pipeline was to export up to 33 billion cubic metres of natural gas a year from Turkmenistan to Afghanistan, Pakistan and India over 30 years, according to a 2014 Asian Development Bank news release.
The latest plan for an Iran-India pipeline is not without worries. “There are security concerns, and other issues like sanctions, especially if we are talking about Iranian gas,” said the second analyst quoted earlier. Analysts also pointed to India’s current huge sourcing of energy supplies from Russia, which is also facing US and EU sanctions. Russia has emerged as among the top suppliers of crude oil to India since the Ukraine-Russia war broke out.
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