The idea first occurred to Iranian and Indian authorities in 1994: that Iran's gas could be transferred to India through a pipeline that passes across Pakistan. To India via Pakistan? What a daring idea? But gradually the idea proved to be not so impossible as it first sounded. Pakistan accepted to participate in a series of trilateral negotiations but these talks advanced very slowly, as expected.
Then, in 2002, when the Iranian President, Mohammad Khatami, went to India on an official visit he put the matter at the top of his agenda. But even these bilateral talks could not considerably speed up the trend.
Considering the territorial disputes between India and Pakistan, it was a miracle, in fact, that negotiations had even proceeded thus far.
The dispute between India and Pakistan over Kashmir that erupted in 1958 has already resulted in two military conflicts. But gas, as a cheap and environmentally friendly fuel, is too attractive to be given up even because of territorial disputes: India needed the gas and Pakistan could gain a great deal by finding access to gas and by charging Iran and/or India for the gas that passed through its territories. Besides, relations between India and Pakistan have been ameliorating considerably though not enough about the subject has been said or shown by the media. Even the railway line between the two countries has resumed its operation after many years.
During recent years experts have established that Iran is the second largest possessor of gas reserves in the entire world, and considering the advantages of this natural fuel, Iran has been exploiting its possibilities more and more and is paying increasing attention to its exports.
Since the major gas fields of Iran are located in the south of the country, a pipeline from this region to India through Pakistan would be most convenient and may help bring the three nations even closer together.
A further advantage of this pipeline would be the possibility of exports of gas to China. China has already signed an agreement with Iran for the purchase of 10 million tons of natural gas and already the gas is being transferred to China in liquid form (LNG) carried in large tankers that are especially made for the shipment of gas in the liquefied form.
A pipeline to India could be easily extended to reach China and even beyond. Then, 2.5 billion people in Southeast Asia could benefit from the advantages of this unique fuel.
In 2004 a series of discussions were held between Indian and Iranian authorities mainly about gas but also on the possible cooperation of the two nations in the development of joint petrochemical plants. Provisionally the two sides have agreed on the sale of 5 million tons of gas to India and on the investment by India in Iranian oil fields and in petrochemical plants.
In the meantime the other oil and gas exporting countries of the Middle East, most notably Qatar, are also trying to expand their exports, while Iran is trying to have larger shares of the European market as well. For this purpose the existing pipeline that runs from Iran to Turkey could be easily extended to Austria which is hoped to act as a hub for the distribution of Iranian gas among European countries.
India, a country with a vast population, has been rapidly becoming industrialized using first grade production facilities and making products to the highest world standards. Therefore, its demand for a cheap and convenient fuel has been expanding equally rapidly. Gas is a "clean" fuel. Also, unlike oil, it is not subject to severe market fluctuations. Therefore, a convenient fuel at a more or less stable price for considerable periods of time are too attractive advantages for India to ignore.
On the other hand, Iran will have access to a secure market for its large gas deposits. Should, for some reason, Pakistan refuse to accept the project – despite the many benefits it offers that country – then there is one other possibility: that of laying a pipeline under the sea from Iran to India. But because a large part of the line will have to be laid on the seabed, some 3000 m deep, this alternative is both far more costly and a great deal more difficult.
But Pakistan cannot let go of this chance as its increasing need for energy is becoming a cause for concern. This is why ever since the project was brought up Pakistan has been improving its relations with India. Some authors, in fact, have called the project the "Pipeline of Peace".