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Singapore/New Delhi: Oil major Total's move this month to effectively withdraw from Iran's last major LNG project brought cheer to India, which now seems to be Tehran's best hope for exporting its huge natural gas reserves.
The trouble is, Delhi's additional negotiating advantage in a $7.6 billion project nearly two decades old may ultimately do little to help overcome much bigger political hurdles.
US success in deterring investors from entering Iran's upstream oil and gas sector may prove an even bigger impediment than it has in the past, especially with India's even more important nuclear energy deal on the line, while relations with Pakistan, the other partner in the pipeline, remain fraught.
No choice
France's Total said recently it would spend no more money on Iranian gas projects for now, just days after Iran tested long-range missiles, making it the latest in a slew of foreign companies to have backed away from Iranian gas.
The move also put on hold any immediate Iranian plans to export liquefied natural gas (LNG), which Iran would have been able to sell flexibly and internationally to the highest bidder, rather than to a fixed buyer through a pipeline.
"This leaves Iran with only one remaining large-scale gas export venture that has not yet been scrapped... the Iran-Pakistan-India gas pipeline," Samuel Ciszuk, Middle East energy analyst at Global Insight in London, said.
That isolation could give India more muscle in prolonged price negotiations, analysts say.
Pricing formula
The three parties have agreed a pricing formula for transportation charges but not the key issue of how much the gas will cost and how much Pakistan may charge as a transit fee.
"The removal of medium-term LNG options would weaken Iran's negotiating position in piped export discussions," said Noel Tomnay, an energy analyst at consultants Wood MacKenzie.
Major domestic gas discoveries in recent years have given India an even stronger hand, although analyst say it still needs to fill huge demand of of some of 115 to 135 billion cubic metres (bcm) of natural gas a year by 2020, up from up 70 to 90 bcm now.
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