Pakistan gas pipeline is Irans lifeline

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Pakistan gas pipeline is Iran's lifeline -This will also be a test about who is the real boss of Pakistani Generals





TEHRAN, March 19 (UPI) -- As Iran braces for another broadside of economic sanctions over its nuclear program, Tehran moves closer to opening up a new lifeline -- a natural gas pipeline to Pakistan and possibly India and China as well.

If everything goes as planned, this much-delayed, controversial project could wreck U.S. efforts to check Iran's expansionist ambitions.

U.S. energy analyst Gal Luft said the pipeline could also "have profound implications for the geopolitics of energy in the 21st century and for the future of South Asia."

Iran and Pakistan signed an agreement for the construction of the 560-mile, $7.5 billion pipeline from the huge offshore South Pars gas field in the Gulf through Pakistan's unruly Balochistan province to Sindh province.

The project is crucial for Pakistan's growing energy requirements. Iran will supply 750 million-1 billion cubic feet of gas per day by mid-2015.

The project was first mooted in 1994. It was intended to carry gas through Pakistan to India in a 1,724-mile pipeline. But India, under intense pressure from the United States, withdrew in 2009, citing disputes over prices and transit fees. There was also deep misgivings in New Delhi about dealing with its longtime foe Pakistan.

India has invested instead in nuclear power to meet its ever-rising demand for energy in its burgeoning economy. It signed a landmark deal with the United States in 2008 for nuclear equipment.

There has been no official explanation about why the Americans would allow Pakistan to go ahead and sign a pipeline agreement with Iran at a time when Washington is striving to isolate the Islamic Republic and paralyze its economy.

But the Americans cannot afford to antagonize Pakistan at a time when Washington needs Islamabad's support to fight al-Qaida and the Taliban. Pakistan is already suffering serious energy shortages with an electricity shortfall of 3,000 megawatts. These cause politically troublesome long and frequent blackouts.

The United States had been pressing for a pipeline to South Asia from gas-rich Turkmenistan in Central Asia via Afghanistan that would bypass Iran. But the security situation in Afghanistan made such a project unlikely.

India hasn't closed all doors to the project and may still rejoin. It is expected to require 146 billion cubic meters of gas per year by 2025 and its options are limited.

China, ever hungry for energy to fuel its mushrooming economy, has indicated that it might sign on and run an extension of the pipeline from Pakistan.

It may provide financial assistance to Islamabad for the project, which would provide an overland energy corridor less vulnerable to interference by the United States -- or others -- than the long tanker route from the Gulf across the Indian Ocean to the Pacific.

China is the main obstacle preventing the United States mustering the U.N. Security Council behind new sanctions on Iran. Sanctions would cut 10-12 percent of China's oil imports and jeopardize oil contracts worth hundreds of billions of dollars.

Iran desperately needs this project. Its potential in the energy sector is enormous. It has the second largest gas reserves in the world after Russia, roughly 15 percent of the world's gas supply.

But U.S.-led sanctions have prevented it from exploiting this through high-volume exports. The pipeline to Pakistan, and possibly the massive markets in India and China as well, could change all that and immunize Tehran from U.S. pressure.

The geopolitical implications of the Iran-Pakistan pipeline going through are immense. If the Americans relent, they may secure concessions from Iran and would certainly win influence in Pakistan by helping it out of a worsening energy crisis.

"By connecting itself with the world's second largest gas reserves, Pakistan would guarantee reliable supply for decades to come," says Luft, director of Washington's Institute for Analysis of Global Security, which focuses on energy security.

"If the pipeline were to be extended to India it could also be an instrument of stability in often tense Pakistan-India relations as well as a source of revenue for Islamabad through transit fees." One estimate puts that at around $600 million a year.

But, Luft concludes, "Should the worst happen and a Taliban-style regime takes over in Pakistan, the economies of the world's most radical Shiite state and that of what could be the world's most radical Sunni state would be connected to each other for decades to come, like conjoined twins."

And there's one other thing. Pakistan already has nuclear weapons and, under that scenario, Iran would, too.
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Outlook: IPI pipeline remains a pipedream


Manorama Online
By Sushma Ramachandran

The ghost of the Iran-Pakistan-India pipeline seems to have been finally laid to rest. Tired of waiting for any decision by India, Iran and Pakistan have gone ahead to sign an agreement for laying a natural gas pipeline between the two countries. A window has been left open for India to join the project later but Pakistan has the right to charge transit fee for the gas sent through its territory. It is highly unlikely, however, that India will ultimately join the project which has been talked about for over 15 years. With security tensions having heightened rather than eased since the project's trilateral negotiations were initiated a few years ago, it may be difficult for the government to seriously become involved in a pipeline venture that can easily be the target of yet another terrorist attack.

Indian petroleum industry experts as well as the security establishment have always been opposed to the scheme on the grounds that it would be virtually impossible to protect the entire length of the pipeline from potential sabotage. One such expert told me that damage to a gas pipeline is easy to incur but difficult to repair because natural gas is invisible making it difficult to detect when released in the open air. Repair thus becomes a highly dangerous task for the pipeline owners. Pakistan energy authorities, on the other hand, have always pooh-poohed such concerns saying there is a large natural gas pipeline network in their country which has remained a safe and secure supply of energy for consumers. In the cases of reported sabotage to this network, they insist that repair work takes place rapidly and there has hardly ever been any prolonged halt in supply of natural gas.

Yet project talks made considerable headway during the first UPA government when the Left parties put tremendous political pressure on their coalition partners to push ahead with the deal. The rationale was two fold. First, it would deepen ties with an Iran increasingly being isolated by the U.S. Second, it would promote peace with Pakistan by development of a binding economic relationship. As a result, Prime Minister Manmohan Singh made several public pronouncements regarding the government's commitment to the project to satisfy the Left allies. The situation, however, has changed dramatically during the UPA-II government. Firstly, there is no longer any pressure from the coalition partners to push ahead with the scheme regardless of security implications. Secondly, the relations with Pakistan have deteriorated dramatically after 26/11. No wonder then that there has been little comment over the last two years on the IPI pipeline project which was touted at one stage as the miracle solution to the country's energy woes.

Officially, however, the government remains committed to the project which was at one stage even described as a "peace pipeline" for India and Pakistan. After over 15 years of discussions, the IPI pipeline project is now estimated to cost 7.5 billion dollars. It envisages supply of gas from Iran's South Pars field by an overland route of 2600 kilometres to the India-Pakistan border. Apart from security considerations, the trilateral talks between Iran, Pakistan and India broke down in 2008 over pricing issues as Iran sought a price higher than that of domestic natural gas suppliers like Reliance Industries. Besides, Iran has been insisting on a take and pay policy under which India has to pay even when it does not delivery of gas supplies. But it is not prepared to accept a proposal for "supply or pay", thus giving compensation in case of non-delivery of gas. Iran is also not prepared to take responsibility of supply up to the India-Pakistan border and wants to hand over the gas supplies to the two consuming countries at the Iran-Pakistan border.

In any case, this project has largely been a pipedream for those who had been looking forward to building peace with Pakistan through economic ties. Unfortunately, the reality of the security situation in the sub-continent has not allowed these dreams to come true. Neither has it been possible to use the pipeline to cement closer ties with Iran. This project is now clearly a closed chapter and India needs to look elsewhere to meet its huge future energy


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Posted By Agha H Amin to Understanding Each Other, Diversity and Dissent at 3/19/2010 10:35:00 PM