http://www.cerebralbusiness.com/Oil...4978/1/Iran-Pakistan-India--IPI--Pipeline.htm
Iran-Pakistan-India (IPI) Gas Pipeline Project Status Updates (June 2010) The Iran-Pakistan-India gas pipeline (IPI) or the Peace Pipeline is a proposed trans-national natural gas pipeline project, which is expected to help Pakistan and India meet shortfall of gas for both commercial and domestic purposes. On June 5, 2009, Pakistan and Iran have signed an agreement to activate a bilateral gas pipeline project, without India's participation, after 14 years of negotiations over what was initially framed as the Iran-Pakistan-India (IPI) gas pipeline project. However, as of July 2009, in pursuance of the Government (India) decision of February 9, 2005, the Government is pursuing the IPI Gas Pipeline Project with the governments of Iran and Pakistan. The $7.5 billion pipeline project would be completed by 2013. The agreement for the proposed IPI pipeline project was signed between Pakistan Interstate Gas Company (PIGC) and the Iranian National Oil Company (INOC) in Turkey as the agreement would be governed through a third country law. Under the gas sale purchase agreement, Iran would provide 750 million cubic feet of gas per day to Pakistan for the next 25 years, which would generate 5,000 MW of electricity. The project, when initially mooted in 1994, was intended to carry gas from Iran to Pakistan and on to India, traversing a total length of 2,775 km.
New Delhi withdrew from the talks last year over repeated disputes on prices, transit fees and security issues. New Delhi has not yet closed pricing and transit issues with Iran and Pakistan and would not sign a pipeline agreement until its concerns for safe passage of gas through Pakistan is addressed. On the other hand, China has shown interest in joining the project and last year said it would import about 1 billion cubic feet a day from Pakistan if India opted out. The determination of gas price would be linked with oil prices in the international market but will be less than 25 percent as compared to crude oil prices. Power generation and usage of imported Iranian gas by heavy industries would result in annual saving of up to $1 billion in furnace oil imports, if the crude oil prices are at $50 per barrel. On June 29, 2009, Inter State Gas System (ISGS), established to execute IPI and TAPI gas pipeline projects, signed a controversial gas sale-purchase agreement silently in Istanbul. According to the price accord, Pakistan will purchase Iranian gas on various prices; there is not a fixed rate, which clearly extends great leverage and benefit to Iran to procure a high price for its exported gas. Iran will sell its gas to Pakistan for $7 per MMBTU, if the Japanese Crude Cocktail (JCC) price is $50 per barrel, $9.4 per MMBTU and $13 per MMBTU if the JCC price touches $70 and $100 per barrel respectively. The price does not include infrastructure, security and other costs. This rather costly gas will be used for power generation. The imported gas price would be 10 to 20 times more costly than the gas being extracted from Baluchistan and Sindh by the central government. Pakistan Petroleum Limited is currently paying only 63 cents per MMBTU for Baluchistan’s high heating value gas.