The Pakistani Spectator

While Pakistan welcomed the US offer to help it overcome the energy crisis, the US made it clear that it was linked to the relinquishing of long-dreamt-about Iran-Pakistan-India (IPI) gas pipeline project.  The need for natural gas is more imperative than ever both for India and Pakistan.  Long-term projections indicate that the demand for gas in India is likely to go up from the present 74 to about 500 million cubic meters per day by the year 2025, necessitating large-scale gas imports.  Similarly, gas supply in Pakistan, currently 71 million cubic meters per day, is expected to increase by 50% in the next five years.  The longer-term outlook would justify significant imports of gas by Pakistan as well.  It is very disheartening that while the world around us is moving towards closer economic cooperation, Indo-Pakistan bilateral relations have been stalled by the 26/11 Mumbai attacks impeding joint economic excursions.  Nevertheless, realizing the importance of the pipeline as the most favoured option, negotiations on crucial energy imports remained unhindered by the on-going tense relations between India and Pakistan.  Now when both the countries have become willing to extend cooperation to each other, it can be hoped that they will promote their mutual cooperation and create a pleasant atmosphere for promoting economic cooperation and resolving controversial issues, like gas imports through trans-national gas pipeline projects, i.e., Iran-Pakistan-India gas pipeline (IPI), Turkmenistan-Afghanistan-Pakistan (TAPI) pipeline project and Gulf-South-Asian, Qatar-Pakistan project etc. extending up to the Indian border.

Since the discovery of natural gas reserves in Iran’s South Pars fields in 1988, the Iranian government began increasing efforts to promote higher gas exports abroad. Iran contains the world’s second largest natural gas reserves “at an estimated 812 trillion cubic feet”.  The negotiations to bring natural gas to India from Iran via Pakistan began in 1994.  The Iranian government proposed the construction of a $7.6 billion Iran-Pakistan-India (IPI) pipeline, also known as the “peace pipeline”, from its South Pars fields in the Persian Gulf to Pakistan’s major cities of Karachi and Multan and then further onto Delhi, India. It travels to Pakistan through Khuzdar, with one section of it going on to Karachi on the Arabian Sea coast, and the main section traveling on to Multan, Pakistan. From Multan, the pipeline travels to Delhi, where it ends. At this point, India is free to consider and negotiate further domestic routing of the pipeline.  The pipeline would be 2,670 km long with a 48 inch diameter, and hold $3.2 billion of gas.  Pakistan could earn as much as $500 million in royalties from a transit fee and save $200 million by purchasing cheaper gas from this pipeline project. The gas pipeline via Pakistan is “a win-win proposition for India and Pakistan” that could serve as a durable confidence-building measure, creating strong economic links and business partnerships among neighbouring countries. But while a rival gas-pipeline project — the Turkmenistan-Afghanistan-Pakistan-India (TAPI), is supported by the Asian Development Bank and America, the IPI does not have any backing from International Financial Institutions (IFIs).  However, both IPI & TAPI projects are to be routed through Balochistan, complicating the matters, as the on-going Baloch Insurgency has caused damage to the gas pipelines & other government installations in Balochistan.  Pakistan, however, has made clear it would build the pipeline with Iran even if India opts out of the project. The construction of the new pipeline could be finished within five years time.

The US is dissuading India and Pakistan from going ahead with the project and is willing to address the long-term energy needs if New Delhi & Islamabad forgo the proposed gas pipeline with Iran via Pakistan.  The pipeline plan seems to be threatened by Washington’s serious reservations about Iran’s nuclear ambitions.  According to the Iran-Libya Sanctions Act, the US President may impose sanctions on any international firm that does $20 million or more in oil or gas business with Iran (and $ 40 million with Libya).  India is eager to push forward a proposed pipeline to carry gas from Iran via Pakistan despite US opposition to the project.  US is “stepping up pressure” to scuttle the project, as the project “could violate Iran and Libya Sanctions Act” passed by the US.   Washington is willing to give nuclear power technology to India for meeting its growing energy needs but in return wants that India should not do business with Iran, a country the US administration label as a “rogue state”. The pipeline deal is creating “wrinkles” in US-India ties. At least in this rare case, both Pakistan and India stood shoulder to shoulder in rejecting relentless pressure from the US administration to scotch the deal.

The rival TAPI gas pipeline project was signed in April 2008, to build a $7.6 billion pipeline delivering natural gas from Turkmenistan to Pakistan and India.   It would cut right through the heart of Western Afghanistan, in Herat, and head south across lightly populated Nimruz and Helmand provinces - the stronghold of Talibans. Turkmenistan had already signed contracts to supply Russia with about 50 billion cubic meters annually, China with 40 billion cubic meters, and Iran with 8 billion cubic meters. The future of the classic IPI vs. TAPI battle may hinge on Gwadar. For its part, China badly needs Gwadar for IPI gas pipeline to be built to western China. Iran’s relations with both Russia and China are swelling - China desperately needs Iranian oil and gas, has already clinched a $100 billion gas “deal of the century” with the Iranians. Gwadar really becomes a key transit corridor for either Iranian gas from the South Pars field heading for China, or Caspian gas from Turkmenistan heading Europe-wards.  There’s US and China’s vested interest in the pipeline diplomacy. The great game is on; with IPI, Iran & China win.  With TAPI, Turkmenistan & the US win.  The question is, “Who profits?”

Pakistan has made invaluable contributions to combating al Qaeda over the past eight years, capturing scores of key leaders and providing tips that led to the foiling of deadly terrorist plots. The death of Tehrik-i-Taliban Pakistan (TTP) Chief Baitullah Mehsud and ensuing infighting among the Taliban indicated that Talibans had become weaker and its top leadership is on the run.  The success of Pakistan security forces in the on-going military operation against the militants in FATA and Malakand areas, is being appreciated by the world community. The Obama administration and the US Congress are committed to supporting Pakistan on a long-term basis and develop its institutions as well as energy requirements.  Pakistan had inked agreement with Iran on June 5, 2009, subject to the approval from their respective governments before September 5, 2009. Pakistan and Iran have formally signed an agreement to activate a bilateral gas pipeline project through a third country law that is why it was signed in Turkey. Pak-Iran gas pipeline project is of vital importance to meet the energy requirements of Pakistan, saving over 5 million dollars on daily basis.  However, the project could be shelved for ever if the US opposes the pipeline because it involves Iran, a country the Obama administration considers a “sponsor of terror”.  Pak-Iran gas pipeline project should materialise in the supreme national interest at every cost. The US understands Pakistan’s energy requirements and needs. It is hoped that the Obama Administration should give green signal to IFIs to release funds for the proposed IPI gasline project so crucial for it’s survival.