Gas Price Issue On Global Trade Deal.

Iran, India, and Pakistan recently agreed to delegate experts who would assume the

task of resolving the price issue that has been affecting the global trade deal on gas planned by the three countries. According to resources, the huge pipeline project would transport natural gas from Iran to India with a distance of more than 2,500 km. If negotiations would go well, the project could start in 2007. Although the global trade deal was aimed for the benefit of the three parties, both Pakistan and India could not still agree with Iran as regards the price of gas supplies. The three nations, then, agreed to delegate independent energy experts in order to study the situation and come up with a plausible pricing solution.

Under the global trade deal, Iran wanted the gas prices to depend on the changes in the international energy markets. However, both India and Pakistan wanted the gas prices to be fixed. The huge project is reported to cost around $7 billion.

The global trade deal was first proposed ten years ago. But negotiations have stalled due to disagreements in terms of pricing. That was why the three countries decided to appoint special officials in order to settle the issue. The energy experts, who have not yet been selected until now, have the duty to come up with an effective solution during the next 4 to 5 weeks.

The three parties would then resume their discussions on the global trade deal, basing it on the new pricing formula. What is not clear though is whether the decision of the consultants will bind the three countries together. It is possible that one of them may still step out of the deal.

M. S. Srinivasan, India's Petroleum Secretary said that there was still a disagreement between the two sides as regards gas prices. He added that all the three countries needed to be flexible in order to push through with the global trade deal on gas. Mr. Srinivasan though said that all the three sides remained bullish. While Iran said that it could trade its gas supplies elsewhere, both India and Pakistan responded by saying that they could also seek for other foreign suppliers.

If the global trade deal on gas materialized, India would be able to purchase up to 60 million cubic meters per day while Pakistan could buy as much as 30 million. The energy demand of both India and Pakistan are expected to increase by 50% in the succeeding years. The pipeline project would also be very advantageous for Pakistan since the nation could gain millions of dollars from transit fees. It must be noted that last May, negotiations among the three countries stalled due to the disagreement on gas. But if the issue would be resolved, the construction could begin next year while the operations could start in 2011. Previously, the United States had rejected the proposed global trade deal due to the strategic and financial benefits it would give Iran. However during his visit to Pakistan last March, President George W. Bush showed signs that the US had already dropped its opposition to the project.

by: joanna

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