1ST LEAD : Iran, India hold talks on major energy projects

Apr 29, 2008, 14:20 GMT

New Delhi - Iran's President Mahmoud Ahmadinejad Tuesday held talks with the Indian Prime Minister Manmohan Singh on major energy projects including finalizing a 7.5 billion dollar gas pipeline despite opposition from the United States.

The Iranian leader met with his Indian counterpart Pratibha Patil soon after his arrival in New Delhi for a five-hour visit that would wrap up a regional tour that included Pakistan and Sri Lanka.

Singh and Ahmadinejad later began talks on a wide gamut of bilateral, regional and global issues, Indian foreign ministry officials said.

The focus of the talks was on multi-billion dollar energy deals, officials said, adding that the two sides were reviewing the progress on the Iran-Pakistan-India (IPI) pipeline as well as the bilateral Liquefied Natural Gas (LNG) project.

The IPI project was first conceptualized by officials from both sides in 1989. The talks began in 1994, but were delayed by tensions between nuclear-armed neighbours India and Pakistan and later disagreements over cost factors.

During talks in Pakistan on Monday, Ahmadinejad had discussed all hurdles concerning the gas pipeline to India and agreed to sign a deal soon. The work on the 2,600-kilometre pipeline from Iran's South Pars gasfield is now slated to start in 2009.

Besides the IPI pipeline, Singh and Ahmadinejad were also expected to discuss a 22 billion-dollar LNG deal, which was signed during Iranian President Mohammad Khatami's visit to India in 2003.

New Delhi is expected to press Iran to honour the agreement which could not be implemented so far because of differences in the cost of gas. Under the deal, India was to get five million tons of LNG a year for the next 25 years.

The situation in connection with the stand-off between Iran and the West over Tehran's controversial nuclear programme could also come up for discussion between the leaders.

Other areas for talks include stability in Afghanistan, counter- terrorism and economic and strategic interests in Central Asia, as both countries are observers in the Shanghai Cooperation Organization (SCO), officials said.

India and Iran have concluded talks to construct a rail link between Chahbahar (in south-eastern Iran) and the Iranian port of Fahraj, local media reports said.

The two countries are also planning to co-operate in the development of a North-South rail corridor connecting India and Iran to Russia.

Ahmadinejad's brief visit to India comes against the backdrop of a chill in bilateral relations over the past two years since India sided with the US to vote against Iran at the IAEA.

Both India and Iran, which have enjoyed traditionally strong ties, with strategic convergence in areas such as Afghanistan now appear keen to mend their ties.

According to Indian analysts, New Delhi has come under pressure from Washington to withdraw from the IPI project as the US believes it would help strengthen Indian-Iranian relations and nullify its efforts to isolate Tehran.

But with the India-US nuclear deal in limbo due to opposition from the Indian government's communist partners, India is keen to secure hydro-carbon sources to meet its burgeoning energy demand.

It recently spurned advice from the US to use its influence and ask Iran to suspend its alleged uranium enrichment activities. New Delhi said it was for the IAEA and not the US to decide whether Iran was making nuclear weapons.

'India and Iran are ancient civilizations whose relations span centuries,' a statement from India's Foreign Office said, adding, 'Neither country needs any guidance on the future conduct of bilateral relations.'

'Ahmadinejad's visit is an opportunity for India at course correction and put its relations with Iran back on solid footing after the vote against Iran at the IAEA,' Qamar Agha, an Iran specialist who has taught in various Indian universities told the IANS news agency.