Oil and Gas Pipeline Watch

By DANIEL GRAEBER, UPI Correspondent  |  May 26, 2009 at 4:27 PM
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IPI deals expected in June

In what could be a major breakthrough if it holds, Iran and Pakistan are set to sign formal agreements on the Iran-Pakistan-India pipeline by June, advisers say.

Asim Hussain, the top energy adviser to Islamabad, led the delegation to Tehran in an effort to hammer out gas sale and purchase agreements with Iran during the weekend.

Hussain and his Iranian counterparts signed onto preliminary documents and intergovernmental agreements on the projects, the semiofficial Petroenergy Information Network in Iran reports.

The bilateral agreement between the Iranian National Oil Co. and the Interstate Gas System of Pakistan defines the provisions whereby Pakistan secures 2.6 billion cubic feet of gas per day from the South Pars gas field in Iran for the next 25 years.

More than 600 miles of the pipeline will travel through Iran, with another 600 traveling through Pakistan, mostly through Balochistan province. India's role in the project remains uncertain, though New Delhi said in the wake of the bilateral meeting in Tehran it was still interested in joining the so-called Peace Pipeline.

Talks over the IPI pipeline have limped along since its inception in 1989 over a variety of concerns, including pricing mechanisms and concerns over security.

Hussain noted, however, negotiations on IPI have moved quickly under the administration of Pakistani President Asif Ali Zardari.

Nord Stream environmental pressures eases

Environmental officials with nations along the route for the planned Nord Stream gas pipeline to Germany will sanction the project by year's end, officials say.

Nord Stream would travel along a dual route from the Baltic Sea to Germany. Several littoral states have expressed concern over the environmental impact of pipeline construction, which is complicated by World War II munitions along the Baltic Sea floor.

Simon Bonnell, chief engineer of the Nord Stream consortium, said he expects environmental officials in states along the 745-mile route to approve the project by the end of 2009, Itar Tass reports.

Bonnell added that once environmental approval is secured, construction on the project can begin in 2010.

Leonid Grigoryev, director of the Russian branch of the World Wide Fund For Nature, said he saw "no big problems" with the project.

The initial line is expected to carry some 971 billion cubic feet of natural gas each year to European customers by 2011, with a secondary line expected to bring the total annual capacity to 1.9 trillion cubic feet per year.

Nord Stream spokeswoman Irina Vasilyeva said the consortium expects to announce the results of the tender for the second line in the latter half of the year.

Nord, South Stream needed desperately

Pushing South Stream and its Nord Stream counterpart will ease transit risks from Ukraine as Kiev struggles with payment schedules, Gazprom said.

Sergei Kupriyanov, spokesman for Russian gas monopoly Gazprom, said the pipeline projects would "considerably reduce transit risks" for all the regional "suppliers, buyers and ultimate consumers," the Interfax news agency reports.

His concerns come as Gazprom Chief Executive Alexei Miller met with Oleh Dubina, his counterpart at Ukrainian energy company Naftogaz.

Gazprom in January disrupted gas supplies to Ukraine over disputes regarding transit contracts and debts. A new 20-year contract resolving the disputes requires Kiev to settle its monthly gas payment by the seventh of the following month.

Ukraine has faced difficulties meetings its payment schedule as the global economic recession hits Kiev particularly hard, though Moscow has expressed patience until now.

"The information provided to Gazprom at the meeting (with Naftogaz) has demonstrated the financial crisis the Ukrainian company is in and has again proved that questions being raised about Ukraine's ability to pay for Russian gas supplies are not baseless," said Kupriyanov.

The ripple effects from the January row between Moscow and Kiev have put renewed focus on diversifying the regional energy sector. Europe sees the answer to its energy diversification strategy in the $10.7 billion Nabucco pipeline through Turkey, while Moscow is lobbying for the Nord Stream pipeline to Germany and the South Stream pipeline to Italy and Austria.

Though Brussels has solidified modest support for Nabucco, Kupriyanov said the European Union needs to act aggressively to secure its energy needs.

"The leadership of the EU must give resolute support to efforts to have those projects put into practice as soon as possible," he said.



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