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Rogozin says Russia-India oil pipeline project is possible

Russia and India can build an oil pipeline between the two countries.

"This is one of the major infrastructure projects that can be implemented. I think it has a right to exist, but we should make calculations to see how profitable it can be," Deputy Prime Minister Dmitry Rogozin said on Wednesday, February 26.

The proposal to build an oil pipeline from Russia to India was put forth by India's Oil and Natural Gas Corporation (ONGC). Its Vice President M.K. Nair told ITAR-TASS that the pipeline could run through Afghanistan and Pakistan.

In a joint statement issued by Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh in Moscow in October 2013 agreed to study the possibility of direct onshore transportation of hydrocarbons from Russia to India and agreed to set up a joint research group to this end.

"We are ready to discuss the details with the Russians," Nair told ITAR-TASS. "The project is economically beneficial to both India and the Russian Federation. Moreover, it will benefit Afghanistan and Pakistan, and when economic prosperity is on the table, differences tend to be forgotten."

India's former Union Minister for Petroleum and Natural Gas Mani Shankar Aiyar told ITAR-TASS late last year that Russia and India should consider a project for a direct ground route to deliver oil and gas from Russia. Such a move would open up bright prospects for both sides, he said.

Mani Shankar Aiyar has been a proponent of greater cooperation between Russia and India in the oil and gas industry. In 2004, when he held the petroleum and natural gas portfolio in Manmohan Singh's cabinet, he visited Sakhalin Island, where ONGC is a partner in the Sakhalin-1 project with Exxon and Rosneft.

ONGC's proposal to run a pipeline from Russia is "one of several prospective projects that can significantly increase the volume of bilateral trade," the head of the Eurasian Department of the Indian Ministry of External Affairs, Ajay Bisaria, said.

India's largest natural gas company, GAIL, proposed that Russia extend its mooted gas pipeline through China to Indian soil. "The idea is being discussed," said the director of the GAIL Department for Quality Management, Siddhartha Sarkar.

"There aren't too many viable options for running an oil pipeline to India. The route through China is mountainous. If it goes through the Himalayas, it will turn into a diamond pipe. The route through Iran is more circuitous. If oil is shipped by tanker through the Black Sea, it will still be several times further. India's proposed alternative route from Russia through Afghanistan and Pakistan is the shortest," Sergei Pikin, director of the Energy Development Fund, told the newspaper Vzglyad, which was quoted by Russia and India Report.

The main risks are political. The war in Afghanistan is still ongoing, plus the high risk of the Taliban returning to power. "But in this part of the world political risk comes with the territory. It's simply a case of carefully selecting the regions where the government is more or less in control of the situation. Plus, there must be a top-level security system in place," Pikin noted.

"Given the current level of safety, the pipeline project is certainly doable. But what happens after that, no one is sure. In any case, such projects are always insured: the policy will cover terrorist incidents," he said. But India has vast potential. "It is one of the fastest growing regions in terms of energy consumption. The Indian market is potentially huge and yet to be courted," he adds.

As for running a gas pipeline to India through China (instead of Afghanistan), the two countries have a complex relationship involving border disputes and mutual suspicion. "If a significant portion of the pipeline passes through the Middle Kingdom, there is a risk that it could be used to exert pressure on India," Dmitry Abzalov, a leading expert at the Russian Centre for Current Politics, said.

The new pipeline would not necessarily be a part of the planned TAPI (Turkmenistan-Afghanistan-Pakistan-India) project, although it might run parallel to it. India has long advocated the politically forward-looking TAPI project. The project has been actively discussed since the 1990s. If built, it would stretch 1700 km with a capacity of 30 billion cubic metres of gas a year. Russia has been invited to take part in the projects, with Gazprom keen to construct the entire stretch of the pipeline.

[Source: Itar Tass, New Delhi, 26Feb14]

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