India, Iran and Oman go under sea to build pipelines, change geopolitics

India is contemplating energy pipelines from the Gulf again — this time running under the sea, rather than traversing Pakistan. With international sanctions on Iran fading as a result of a nuclear agreement, an energy pipeline may be the most positive regional consequence.

The new plan proposes to transport oil and natural gas through deep sea pipelines via Oman in a process where Iran, and even Turkmenistan and Azerbaijan energy can feed the pipeline for an ever-growing Indian market. Yusuf bin Alawi bin Abdullah, Oman's foreign minister, raised the possibility with Salman Khurshid during their meeting on Friday.

Oman had invested $90 million on this project over a decade ago, but it got no traction then. But now, the technology has come of age, with pipelines being built under the Mediterranean Sea from Algeria to Itali, and under the Black Sea from Russia to Germany. Abdullah suggested the pipeline could transport gas from Iran, even Qatar, as well as Central Asian states.

Khurshid floated the prospect with Javad Zarif, Iranian foreign minister, who he met later in the day. The Iranians have revived talk of deep-sea pipelines to India after the failure of the IPI pipeline. Iran cancelled a $500 million loan to Pakistan in December. India had pulled out of the IPI several years ago citing price and security issues.

Those issues remain. In fact, as the US withdraws from Afghanistan, the TAPI pipeline from Turkmenistan through Afghanistan and Pakistan is fast losing its attractiveness.

Iran has reportedly jumped at the idea. Oman is India's most trusted partner in the Gulf, therefore comfort levels are high between New Delhi and Muscat, more than even with Iran. Zarif added to the Omani proposal __ Iran was negotiating separately with Turkmenistan for an overland pipeline to carry its gas to an Iranian terminal and thence to markets like India. If these negotiations succeed, Iran could be a beachhead for gas not only from its fields but from other Gulf suppliers, even Qatar, which is India's largest supplier of LNG.

"An undersea pipeline from Iran to India could be completed as quickly as 3-4 years. Our feasibility studies show they would cost in the region of $5 billion," said Subodh Jain, whose company, Sage is the best known Indian entity to acquire technology for such pipelines. Jain has proposed building an under-sea energy infrastructure corridor, which could be used by major gas suppliers to connect to terminals in India's west coast. Any such pipeline could transport about 31 million cubic meters of gas a day.

"India relies on LNG, but it's the equivalent of relying on champagne. If we stick to LNG, we will become addicted to expensive energy imports. Therefore, a gas pipeline particularly for the power sector, makes eminent sense," said a senior official. "Very soon, almost 20,000MW of gas-fueled power plants will go idle in India due to gas shortage. Pipelines are overdue here."

If energy trade is to resume between Iran and India, the Chahbahar port acquires greater important. Zarif and Khurshid agreed to get the final agreement on investment. India is putting in an affordable $100 million before the Nauroz holidays. The shipping ministry has already completed its studies and price estimates, so officials working on the project said this should not be a stretch.

The Iranian government has been flipping back and forth on this project, so officials reckon a deadline would focus attention in New Delhi and Tehran.

Once complete, Chahbahar would also be the entry point for Indian goods travelling to Central Asia and beyond through the international north-south transport corridor. In their conversation, Zarif made a determined pitch for the INSTC, though it has been Iranian tardiness that has delayed a project like this. In 2012, Turkey officially offered to join the north-south corridor, though with their recent troubles with Iran, no one is quite sure whether that still holds true.

In a related decision, India will conduct a dry run study in March on the INSTC, through Nhava Sheva (Mumbai)- Bandar Abbas (Iran)- Tehran-Bandar Anzali (Iran)-Astrakhan(Russia). This was agreed between India and Azerbaijan during the recent visit of Huseyngulu Baghirov, natural resources minister. Iran and Azerbaijan have to build Gazvin-Rasht-Astara (Iran)-Astara (Azerbaijan) railway route for connecting the railway lines of the INSTC.

What is clear is that Iran is returning to the geostrategic table in the region. It needs to have a credible nuclear agreement with the west before that happens.