Iran may pay $8 billion as gas project fee
By Khaleeq Kiani
ISLAMABAD, March 23: Iran has offered $8 billion to Pakistan as the transit fee for laying a
2,672-km trans-Pakistan gas pipeline to India, authoritative sources told Dawn.
Total income to Pakistan comes to around $14 billion during the next 30 years: $8 billion as transit fee,
$1 billion as taxes and $5 billion as saving.
Iran and India are pursuing to lay the huge pipeline across Pakistan at an estimated cost of $4.8 billion.
The pipeline is to transmit 600 to 3,000 MMCFD of natural gas from South-Pars gas field in Iran to
India. Pakistan has already extended a no objection certificate to the two neighbours but some
political issues are still under consideration between Tehran and New Delhi before the launch of the
project.
The Iranian offer, say sources, has come through informal channels because the three nations have not
yet signed a formal agreement or Memorandum of Understanding (MoU) on the subject.
According to the proposal, Iran is ready to pay $8 billion to Pakistan either in lump sum for the
30-year period, or $206 million on an annual basis for transmission of one billion cubic feet (1 BCF)
of free flow and 2BCF of under compression gas.
The amount, if worked out "on the volumetric basis, is in line with the transit fee rates (as a percentage
of total volume transmitted) applicable in various other countries through which the inter-state gas lines
are passing," hinted sources in the petroleum ministry.
Iranians have also calculated the annual income from transit fee that could accrue to Pakistan on the
volume of the gas that is to be transmitted to India.
However, the question whether the payment is to be made on a monthly, quarterly, biannually or
annually basis could be negotiated under the agreement, said these sources.
There could have been no tripartite talks on the issue though Pakistan had even proposed that the
three countries should sign an MoU at the government level.
Iran and India have exchanged a couple of ministerial and technical level delegations whereas Pakistan
is in contact with Iran.
Pakistan and India, however, have no direct interaction despite revival of the project around 18
months ago.
However, Petroleum Minister Usman Aminuddin denied to have received any direct offer from Iran so
far. He said the technical and commercial issues, including royalty, transit fee, tariffs and fiscal
guarantees, could be discussed only when there was a political agreement among the three countries.
Pakistan experts estimate an annual fee of around $600 to $700 million from the project. The amount
can go even higher in case Pakistan does not purchase a portion of gas from the proposed project in
view of new-found reserves at home.
Islamabad wants a fixed royalty or user charge for the land, throughout (volume) charge both in case
the gas is transmitted or not, and a provision to inject its gas in the pipeline, subject to availability.
Of late, India had wanted financial guarantees to ensure uninterrupted gas supplies across Pakistan.
Officials in Pakistan, however, believed that the involvement of agencies like the World Bank, Asian
Development Bank and other international financiers and multinational petroleum companies would
automatically make it binding under an international agreement that no party would be able to breach.
Multinationals like Shell, British Gas, Gazprom, Petronas Carigali, Gas de France, BHP and
Novacorp have already indicated to form at least two separate consortia for the project.
Diplomatic sources said that Iranians had worked out the offer on the basis of over a dozen similar
transit pipeline contracts being in practice around the world.
Some of them include six transit pipelines from Algeria to Portugal, Spain, Italy, France, Belgium
Austria and Czech Republic; three pipelines from UK to France, Russian gas in Ukraine, and
Germany; and the Netherlands and Dutch gas for France.The pipeline gas tariff will start from $0.80
to $1.60 per MMBTU in Iran, will go up to $1.48 to $2.28 per MMBTU in Pakistan, and reach
$2.26 to $3.06 per MMBTU in India.
=============================================
Excellent news ain't it??
------------------
CROIRE A L'INCROYABLE
By Khaleeq Kiani
ISLAMABAD, March 23: Iran has offered $8 billion to Pakistan as the transit fee for laying a
2,672-km trans-Pakistan gas pipeline to India, authoritative sources told Dawn.
Total income to Pakistan comes to around $14 billion during the next 30 years: $8 billion as transit fee,
$1 billion as taxes and $5 billion as saving.
Iran and India are pursuing to lay the huge pipeline across Pakistan at an estimated cost of $4.8 billion.
The pipeline is to transmit 600 to 3,000 MMCFD of natural gas from South-Pars gas field in Iran to
India. Pakistan has already extended a no objection certificate to the two neighbours but some
political issues are still under consideration between Tehran and New Delhi before the launch of the
project.
The Iranian offer, say sources, has come through informal channels because the three nations have not
yet signed a formal agreement or Memorandum of Understanding (MoU) on the subject.
According to the proposal, Iran is ready to pay $8 billion to Pakistan either in lump sum for the
30-year period, or $206 million on an annual basis for transmission of one billion cubic feet (1 BCF)
of free flow and 2BCF of under compression gas.
The amount, if worked out "on the volumetric basis, is in line with the transit fee rates (as a percentage
of total volume transmitted) applicable in various other countries through which the inter-state gas lines
are passing," hinted sources in the petroleum ministry.
Iranians have also calculated the annual income from transit fee that could accrue to Pakistan on the
volume of the gas that is to be transmitted to India.
However, the question whether the payment is to be made on a monthly, quarterly, biannually or
annually basis could be negotiated under the agreement, said these sources.
There could have been no tripartite talks on the issue though Pakistan had even proposed that the
three countries should sign an MoU at the government level.
Iran and India have exchanged a couple of ministerial and technical level delegations whereas Pakistan
is in contact with Iran.
Pakistan and India, however, have no direct interaction despite revival of the project around 18
months ago.
However, Petroleum Minister Usman Aminuddin denied to have received any direct offer from Iran so
far. He said the technical and commercial issues, including royalty, transit fee, tariffs and fiscal
guarantees, could be discussed only when there was a political agreement among the three countries.
Pakistan experts estimate an annual fee of around $600 to $700 million from the project. The amount
can go even higher in case Pakistan does not purchase a portion of gas from the proposed project in
view of new-found reserves at home.
Islamabad wants a fixed royalty or user charge for the land, throughout (volume) charge both in case
the gas is transmitted or not, and a provision to inject its gas in the pipeline, subject to availability.
Of late, India had wanted financial guarantees to ensure uninterrupted gas supplies across Pakistan.
Officials in Pakistan, however, believed that the involvement of agencies like the World Bank, Asian
Development Bank and other international financiers and multinational petroleum companies would
automatically make it binding under an international agreement that no party would be able to breach.
Multinationals like Shell, British Gas, Gazprom, Petronas Carigali, Gas de France, BHP and
Novacorp have already indicated to form at least two separate consortia for the project.
Diplomatic sources said that Iranians had worked out the offer on the basis of over a dozen similar
transit pipeline contracts being in practice around the world.
Some of them include six transit pipelines from Algeria to Portugal, Spain, Italy, France, Belgium
Austria and Czech Republic; three pipelines from UK to France, Russian gas in Ukraine, and
Germany; and the Netherlands and Dutch gas for France.The pipeline gas tariff will start from $0.80
to $1.60 per MMBTU in Iran, will go up to $1.48 to $2.28 per MMBTU in Pakistan, and reach
$2.26 to $3.06 per MMBTU in India.
=============================================
Excellent news ain't it??
------------------
CROIRE A L'INCROYABLE
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