The Hindu : Front Page : Iran-India pipeline project not to be abandoned: Aiyar

Online edition of India's National Newspaper
Sunday, Jul 24, 2005

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Iran-India pipeline project not to be abandoned: Aiyar

Special Correspondent

India's enormous energy requirement cannot be met without Iran gas

STEELY RESOLVE: Minister for Petroleum and Natural Gas Mani Shankar Aiyar welcoming Chairman and CEO of Mittal Group L. N. Mittal at his office in New Delhi on Saturday. — Photo: Kamal Narang

NEW DELHI: Close on the heels of Prime Minister Manmohan Singh voicing concern over the security risks involved in the Iran-Pakistan-India gas pipeline, Minister for Petroleum Mani Shankar Aiyar said on Saturday that the country's deal with the U.S. on nuclear energy was not a "quid pro quo" for abandoning the $ 7.4-billion pipeline project.

New Delhi will continue negotiations with Islamabad and Teheran on the gas pipeline to achieve a project structure, Mr. Aiyar announced while speaking during the signing ceremony of the MoUs (memoranda of understanding) between the state-owned oil major, Oil and Natural Gas Corporation (ONGC) and the L.N. Mittal Group, the world's largest steel producer, to set up two joint venture (JV) companies in a unique public-private partnership.

Asked if India had agreed to ground the pipeline project for import of Iranian natural gas so as to obtain nuclear fuel and technology from the U.S. for power generation, Mr. Aiyar quipped: "I don't think there is any connection between the two."

The Prime Minister, during his U.S. visit earlier this week, had stated in Washington that the pipeline project was "fraught with risks" and expressed doubts as to whether any international bankers' consortium would be ready to underwrite the project.

Mr. Aiyar said: "The Iran-Pakistan-India pipeline project is fraught with terrible risks. In my view, it is going to be extremely difficult to put together a financial consortium to finance the project and run [it] as a world-class project. But (India's) enormous energy requirement cannot be met without accessing gas in Iran." Earlier, ONGC's overseas arm, ONGC Videsh Ltd. (OVL), inked an MoU with Luxembourg-based Mittal Investment SARL for setting up a JV called ONGC-Mittal Energy Ltd. The JV, in which the two partners are to share 98 per cent equity in the proportion of 51:49 with the balance two per cent stake going to financial institutions, is to be engaged in the exploration of oil and gas as well as acquisition of hydrocarbon assets and companies abroad.

Under another MoU between ONGC and Mittal Investment under the same shareholding pattern, a second JV called ONGC-Mittal Energy Services Ltd. is to be involved in trading and shipping of oil and gas, including LNG, sourced from the other JV company.

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