Oil and Gas Pipeline Watch

Trilateral IPI body expected soon

A trilateral ministerial body is planned for Tehran, Islamabad and New Delhi to hammer out differences for the Iran-Pakistan-India natural gas pipeline.

Indian External Affairs Minister Pranab Mukherjee made proposals for the mechanism during a weekend visit with Iranian Oil Minister Gholamhossein Nozari. The IPI body will involve energy ministers from the three sides in order to resolve outstanding disputes regarding the pricing mechanism as well as other issues concerning the planned 1,724-mile pipeline from Iran's South Pars gas field, the Press Trust of India said.

Pakistani President Asif Ali Zardari and his Iranian counterpart, Mahmoud Ahmadinejad, made progress over price disputes on the sidelines of the 63rd U.N. General Assembly in New York in September.

Mukherjee said during the weekend meeting that India could expect its natural gas demands to more than double in the next 15 years. Addressing a civilian nuclear deal with the United States, he said his country expects demand to far outpace supplies, making any energy deal attractive.

"The basic imperative of the India-U.S. civil nuclear agreement is the same as that which binds us to the Iran-Pakistan-India gas pipeline -- our energy needs are too large to be met from any one single source," he said.

U.S. Secretary of State Condoleezza Rice in October reached a deal with India to sell the country nuclear fuel, reactors and technology for civilian use.

For his part, the Iranian oil minister said in a Fars News report it was time for New Delhi to move ahead with talks on the project so it could move forward without issue.

"In the light of the many wasted opportunities in the pipeline project because of stalling by India, we asked this country to be more active," Nozari said.

Iran has completed about half of the IPI pipeline and expects to start exports to Pakistan in the next two years. The South Pars gas field and its Qatari-held North Dome companion make up the largest natural gas field in the world.

Construction on Chinese ESPO route to launch in 2009

Construction on the Chinese artery of the Eastern Siberia-Pacific Ocean oil pipeline may begin in early 2009, said officials with Russian firm Transneft.

Nikolai Tokarev, president of the state-owned pipeline firm, said construction might begin in the first quarter of next year following the completion of design coordination with the China National Petroleum Corp., China's official Xinhua news agency reported.

Tokarev said the final designs for the $600 million project to China were presented to the appropriate officials for approval. The Chinese route, however, is plagued with construction challenges, notably a portion along the bed of the Amur River, the world's fourth longest.

Construction on the route was delayed to early next year, though Russian Prime Minister Vladimir Putin in August called for increased resolve on the project.

The 2,900-mile pipeline will run from southeastern Siberia east to China. The first 1,670-mile phase has a transport capacity of around 210 million barrels of oil per year.

France embraces South Stream pipeline

There are signs the European Union may embrace both the Nabucco natural gas pipeline and its rival, South Stream, statements from foreign ministers suggest.

French Foreign Minister Bernard Kouchner told the Russian daily Kommersant that his country favors both pipelines and considers joining the two routes to met European energy demands.

France is the current holder of the European presidency, and the comments from the foreign minister run in opposition to stated EU policy, which is to move away from dependence on Russian energy, the Eurasia Daily Monitor from the Jamestown Foundation reported.

The state-run Gaz de France had in 2006 pushed for joining the Nabucco consortium but was blocked by Turkey following a Paris decision to censure Turkey for its role in the deaths of Armenians in 1915 to 1918. Paris has now moved in favor of South Stream, the Russian-backed pipeline to Italy.

The Paris move on South Stream comes on the heels of similar rhetoric expressed by Slovenia during its EU presidency but may contradict a recent effort by EU Energy Commissioner Andris Piebalgs to launch a diplomatic tour in support of Nabucco.

Ferran Tarradellas, a spokesman for the commissioner, said Europe would leave any decisions on the pipelines up to individual countries, however.

High costs, complicated by the current global financial downturn, put South Stream in limbo as Moscow has put off any immediate plans on the project.

--

(e-mail: energy@upi.com)