In January 2008, as Pakistan was secretly planning a wave of terrorist attacks that would strike Jaipur, Bangalore, Ahmedabad, Delhi, and culminate in the Mumbai massacre of November that year, India’s Petroleum Minister Murli Deora was meeting his Pakistani counterpart at the Crowne Plaza Hotel in London – to finalise a multi-billion dollar gas pipeline running from Iran, through Pakistan, into India.
It was called the Iran-Pakistan-India Pipeline. Its backers called it the Peace Pipeline. In hindsight, it may have been the most dangerous energy gamble India never took.
What Was the IPI Pipeline?
First proposed in the early 1990s, the IPI pipeline would carry natural gas from Iran’s South Pars field, one of the largest in the world, through 1,035 km of Pakistani territory before entering India near Barmer, Rajasthan. Total length: 2,135 km. Estimated cost: over $7 billion. Designed capacity: 60 million standard cubic metres per day, split equally between India and Pakistan.
For an energy-hungry India growing at 8–9% annually, the appeal was obvious. The UPA government under Dr. Manmohan Singh pursued it earnestly through 2005, 2006, 2007, and into 2008.
Dear young people,
You have no idea how crazy UPA was
Here was Dr. Singh’s worst idea … to build an oil pipeline from Iran through Pakistan to India!
Imagine putting our oil supply in hands of Pakistan…
Thankfully, the idea was canceled, mostly under US pressure. pic.twitter.com/NU2whPdIi8
— Abhishek (@AbhishBanerj) March 2, 2026
The Veto Problem Nobody Wanted to Discuss
There was one fundamental flaw: Pakistan would control the tap.
Every cubic metre of gas entering India would first pass through over a thousand kilometres of Balochistan and Sindh – regions marked by insurgency and chronic instability. India proposed paying only upon delivery at the Indian border, so it would not pay if Pakistan disrupted supply. Iran refused, insisting India pay regardless of Pakistani interference. In plain terms, Pakistan could cut off India’s gas during any border standoff or diplomatic crisis, and India would still owe Iran the money.
The Year Pakistan Was Planning Terror
The January 2008 London handshake happened while Pakistan’s security establishment was running operational planning for the deadliest terror campaign India had ever seen. Jaipur was bombed in May, Bangalore and Ahmedabad in July, Delhi in September, and Mumbai in November – 166 killed in 26/11 alone. India was negotiating energy dependency with the very state whose proxies were simultaneously planting bombs in its cities.
Why India Walked Away
India distanced itself from 2007 onwards, citing security concerns and pricing disputes. The final push came from the India-US civil nuclear deal of 2008, which carried an unspoken expectation that India would not deepen ties with Tehran. US sanctions on Iran sealed the decision. Pakistan’s Foreign Minister Shah Mahmood Qureshi later acknowledged India “pulled out for obvious reasons.”
The Lucky Near-Miss
Had the pipeline been built, US sanctions reimposed after 2018 would have rendered it legally unusable. Every India-Pakistan crisis, Pulwama, Balakot, would have unfolded with Islamabad’s hand on an energy switch. The IPI was dressed up as a peace project. In reality, it would have been a permanent structural vulnerability. Its cancellation, even if driven largely by American pressure, may be one of the luckiest near-misses in India’s post-liberalisation history.
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