India's oil minister said on Saturday a proposed gas pipeline from Iran across Pakistan was a risky venture that would be difficult to finance, but added talks on the 7 billion dollars project should continue. "The pipeline proposal is, as the Prime Minister stated, fraught with terrible risks," Mani Shankar Aiyar told a news conference.
Indian Prime Minister Manmohan Singh expressed concerns about the project during his visit to the United States this week, when President George Bush recognised India as a responsible nuclear state and promised co-operation with its civilian atomic power programme.
Some officials suggested that India may abandon plans to import Iranian gas in return of a nuclear energy deal with the United States, which has expressed concerns over the Iran-India project because of its opposition to Tehran's nuclear programme.
Aiyar said the issues were not related. "I don't think there is any connection between the two," he said, but he added the project faced formidable challenges. "In my view it is going to be extremely difficult to put together an international consortium, which should be willing to finance this project," he said.
Indian officials said besides worries about relations with Pakistan - the countries have fought three wars - security for any pipeline was a concern because it would run across volatile areas of Pakistan where other pipelines have been attacked in the past.
Aiyar said India should import piped gas as it faces a deficit of 200 million cubic metres a day in 20 years even if more gas was discovered in the country. "It is essential that we continue the process of negotiations which, as the Prime Minister said, is at present at a very preliminary stage," Aiyar said.
India is also keen to develop nuclear energy, which meets only 3 percent of its power requirement but the government aims to increase that to about 25 percent by 2050.
Analysts said nuclear energy was an attractive option but it would take a long time to hit India's demand for oil or gas. "In the near to medium term, the impact of nuclear in overall energy terms will be marginal," said Praveen Martis, an analyst with Wood Mackenzie.
Kirit Parikh, member of India's planning commission, said nuclear energy was not a substitute for natural gas. "All the gas is not used to generate power. India needs more gas."