“In view of very low quantity (involved), 30 million standard cubic metres per day (MSCMD), India’s participation may not give any strategic advantage to India. Thus India can buy at Pakistan-India border and mitigate all risks through Gas Sales Agreement with Iran,” says the strategy paper.

“Since the mandate from the government is to buy gas at India-Pakistan border, it will be desirable that Iran should negotiate transmission tariff and transit fee with Pakistan and offer a composite price to India at Pakistan-India border.”

“This will be contractually a better proposition than India entering into a separate agreement with Iran for gas at Iran-Pakistan border and then a contract with Pakistan for transmission of gas and transit fee,” it says.

The rethink on project participation emerges from Iran’s denial to involve India or Pakistan in building the pipeline segment within its country. “With this the project gets reduced to Pakistan-India pipeline,” says the ministry.

Pakistan, on the other hand, is keeping mum on whether it would allow Indian participation in its pipeline stretch. “This will require political sanction...Even in India, it would require political clearance as the existing mandate is to buy gas at Pakistan-India border,” says the Ministry’s report.

Moreover, gas availability for Pakistan and India together would be restricted to 60 MSCMD as Iran has already started work on a 56-inch diameter pipeline. To meet India’s expressed demand for 90 MSCMD, Iran would need to build a second pipeline of similar size. But chances are that the gas price could be higher. “It is not clear whether Iran would offer the same price if India insists on higher volumes. This may call for re-negotiation of price with Iran,” says the paper. Even the delivered gas price computed by the ministry does not give a clear advantage to the Iranian gas. If Pakistan were to be paid a transit fee of 20 cents per million British thermal units, instead of $1.57 per mBtu it is asking, even then the IPI gas would be marginally costlier than Australian LNG (as indicated by Petronet LNG Ltd) at current crude oil prices, the Ministry has argued.