Académique Documents
Professionnel Documents
Culture Documents
Editor
Dr Noor ul Haq
Assistant Editor
Muhammad Nawaz Khan
2 IPRI Factfile
C ONTENTS
Preface v
1. Pakistan-Iran Gas Pipeline: History and Perspectives 1
2. Pakistan, Iran Finally Sign Gas Pipeline Accord 5
3. Trade and Transit of Goods Get Special Attention: Pakistan,
Iran Sign “Peace Pipeline” Declaration 6
4. Peace Pipeline at Last 8
5. India has No Plan to Shelve IPI Gas Pipeline 9
6. IPI Becomes “Peace Pipeline” 10
7. Pipeline or Pipe Dream? 12
8. Gazprom and IPI 15
9. Feasibility of Iran-Pakistan Gas Pipeline Project: Contract
Awarded to German Firm 16
10. Will China Join the Iran-Pakistan-India Pipeline? 18
11. Iran-Pakistan Pipeline Project to Cost $3-4 Bn 22
12. Iran and Pakistan Sign Historic Pipeline Deal 23
13. Pipeline Agreement 24
14. Iran-Pakistan Gas Pipeline 25
15. IPI: The Baloch Perspective 27
16. Pipeline Politics 28
17. Unrealistic Advice 29
18. U.S. Objection to Pak-Iran Gas Pipeline 30
19. Frivolous U.S. Objection to Gas Deal with Iran 31
20. Pipeline Politics 32
21. U.S. Diktat on Iran Pipeline Not to be Entertained 35
22. Iran to Complete Peace Pipeline 36
23. Pakistan, Iran Sign Major Gas Pipeline Pact 37
24. Pak-Iran Gas Pipeline 38
25. Iran to Approve Pakistan Gas Pipeline Deal this Week 40
26. Iran-Pakistan Gas Pipeline Project Inked 41
27. Iran Begins Work on Gas Pipeline Today 42
28. Pakistan Seals Pipeline Deal with Iran 44
29. Iran-Pakistan Gas Deal Boosts Iran 46
30. U.S. Says New Sanctions on Iran could Impact Pakistan 48
Iran–Pakistan Peace Pipeline 3
P REFACE
1
Prime Minister of Pakistan, Dawn (Karachi), February 23, 2005.
Iran–Pakistan Peace Pipeline 5
Though India has lately shown interest in the pipeline again, the
real reason why it backed out of the three-nation deal was its nuclear deal
with the U.S. signed in 2008. It is also alleged that there were “deliberate
attempts by India to sabotage this vital venture, as New Delhi used it as a
bargaining chip with the United States during discussions on nuclear
accord to gain more concessions.”2 Earlier, in 2008, Iran had also
expressed its interest to provide gas to China, whose response is yet to be
ascertained.
This issue of the IPRI Factfile provides a few articles and
comments appearing in the media from May 24, 2009 till July 27, 2010.
2
Editorial, Pakistan Observer (Islamabad), July 18, 2010.
Iran–Pakistan Peace Pipeline 1
History
The idea was conceived by a young civil engineer in mid 1950s, when an
article of his was published by the Military College of Engineering,
Risalpur. His name was Malik Aftab Ahmed Khan. He retired from the
Pakistan Army as a Lt. Col. in 1976 and died in 1999, at the age of 70
years. The article "Persian Pipeline" also mentioned the method for its
protection along the hostile territory by establishing mini battalion-size
cantonments along its proposed route through Baluchistan/Sind. Serving
multiple functions, to control dacoits and terrorists etc and to provide
protection to the pipeline. The project was conceptualized in 1989 by
Rajendra K. Pachauri in partnership with Ali Shams Ardekani, former
Deputy Foreign Minister of Iran. Dr Pachauri proposed the plan to both
Iranian and Indian governments in 1990. The government of Iran
2 IPRI Factfile
Agreements/MOUs
1. Discussions between the governments of Iran and Pakistan started in
1994. A preliminary agreement was signed in 1995 between Pakistan and
Iran. This agreement foresaw construction of a pipeline from South Pars
gas field to Karachi in Pakistan.
(The South Pars/North Dome field is a natural gas condensate field
located in the Persian Gulf. It is the world's largest gas field, shared
between Iran and Qatar. According to the International Energy Agency,
the field holds an estimated 50.97 trillion cubic meters (1800 trillion cubic
feet) of in-situ gas and some 50 billion barrels of condensates. This gas
field covers an area of 9700 square kilometers, of which 3700 square
kilometers (South Pars) is in Iranian territorial waters and 6000 square
kilometers (North Dome) is in Qatari territorial waters)
2. In February 1999, a preliminary agreement between Iran and India was
signed to extend the pipeline from Pakistan into India.
3. The project was revived and bilateral Iran-Pakistan Joint Working
Group (JWG) was constituted and the first meeting was held on
December 29-30, 2003 in Islamabad. An MOU was signed on July 7, 2005
to include India in the Project.
4. A Term Sheet was signed between Iran and Pakistan on November 16,
2005. The Term Sheet provided for gas supply of 2.1 billion cubic feet per
day (Bcfd) for a period of 30 years.
5. In February 2007, India and Pakistan agreed to pay Iran US$4.93 per
million British thermal units (US$4.67/GJ) but some details relating to
price adjustment remained open to further negotiation.
6. Initial gas price formula agreed in January 2007. The Economic
Coordination Committee of the Cabinet (ECC) in April 2007 approved
gas price formula subject to the condition that in case Iran offers a better
price to India, the same would be applicable to Pakistan.
7. Pakistan held a number of separate bilateral meetings with Iran as well
as with India and project issues like gas volumes, project structure,
governing laws, pipeline route, principles of transport tariff and transit
fee were deliberated upon in detail.
Iran–Pakistan Peace Pipeline 3
Perspectives
1. The Project is planned to be financed on Public Private Partnership
basis.
2. However, in view of the strategic nature of the project the Govt of
Pakistan (GOP) will hold controlling share in the pipeline company
through investment by Public Sector Entities (PSEs).
3. The project will support around 4,000 MW power generation capacity,
which will help in overcoming the power shortage crisis.
4. The construction of pipeline will also create job opportunities in
backward areas of Balochistan and Sindh.
5. Iran clearly connects the main perspectives with further building of the
pipeline into other countries; Pakistan as well interested in additional
income due to gas transit. India left the negotiations in 2008 but its
economy grows rapidly, and energy consumption and deficit are growing
as well. It is quite probable that one more branch of the pipeline will go
to India.
6. Another frequently discussed possible variant is continuing the pipeline
to China.
4 IPRI Factfile
Inter-state Gas System for the export of Iranian natural gas to Pakistan at
the border of Iran-Pakistan for domestic consumption in Pakistan.
The deal known as a ‘peace pipeline’ was signed on the sidelines of
the current tripartite summit of Pakistan, Afghanistan and Iran on
elimination of terrorism, drugs and human trafficking – also on Sunday.
Some 1,100 of the 2,100 kilometre pipeline would be laid in Iran’s
territory and 1,000 kilometres in Pakistan.
Foreign Office Spokesman Abdul Basit said Iran would supply 23
million cubic metre gas per day for 25 years under the agreement, adding
the agreement could be extended for an additional five years.
He said it was agreement between Pakistan and Iran, however, the
agreement had provisions to include India if it wanted to join the project.
Adviser to the Prime Minister on Petroleum Asim Hussain told
APP that Pakistan and Iran would sign the formal agreement for the
multi-billion dollar project in a third country within the next 15 days.
Special issues: The three countries agreed to establish a mechanism
for holding regular and periodical trilateral consultations on special issues,
according to a joint communiqué released at the conclusion of the one-
day trilateral summit.
The three countries reaffirmed their deep commitment to make
every effort to eliminate extremism, militancy and terrorism from the
region.
The three countries will also collaborate closely in establishing and
developing energy corridors in the region, including oil and gas pipelines
and electricity networks.
Trilateral economic, industrial, planning commission and chambers
of commerce will also be established.
Trade: The three sides emphasised further effective measures for
implementation of bilateral, trilateral and multilateral agreements on
trade and transit of goods between and through their countries.
Zardari: President Asif Ali Zardari on Sunday stressed for joint
efforts and increased cooperation among Pakistan, Afghanistan and Iran
for combating the challenges of terrorism and militancy, which were
badly hurting peace, security and development in the region.
“We have to get together to tackle these challenges. It is not just the
matter of our survival, but for the betterment and safety of our future
generations,” Zardari said.
Daily Times (Lahore), May 25, 2009,
http://www.dailytimes.com.pk/default.asp?page=2009\05\25\story_25-5-
2009_pg1_1
8 IPRI Factfile
There is little good news these days, but perhaps we should not despair.
Iran and Pakistan have signed a deal to construct a gas pipeline that had
been on the cards since 1995, notwithstanding the numerous turns and
twists in negotiations. The gas sales agreement should also be signed
shortly. We can then hope for work on the project to begin. This is a
major breakthrough for Pakistan which will gain tremendously in the
energy sector. When completed the 2100-kilometre pipeline will carry
750 million cubic feet of gas per day from Iran’s South Pars fields to
Nawabshah in Sindh. This gas will be used only for energy generation
and help produce 5000MW of electricity for this power-starved country.
The price agreed upon for the moment i.e. 80 percent of the oil price,
may not be as low as initially bargained for. But in the absence of
alternatives this appears to be the most feasible offer. With oil prices
falling as they are these days, Pakistan should benefit.
There are, however, two aspects of this project that must be kept in
mind. One is directly linked to Pakistan’s security concerns in
Balochistan. Fears have been expressed that the turmoil in Balochistan
will threaten the security of the pipeline since a great length of the 1,000
kilometres inside Pakistan passes through that province which borders
Iran. Islamabad could convert this factor to its advantage if it can ensure
that in the construction of the pipeline indigenous labour is hired and the
gains of the economic activity inevitably generated by projects of such
magnitude are focused on Balochistan for the benefit of its poverty-
stricken people. The peace pipeline will begin functioning in another five
years. This period should be used by Islamabad to address the Balochistan
problem in earnest to find a just solution that redresses the grievances of
the province’s citizens.
The international implications of the Iran-Pakistan pipeline accord
also have great significance. At one stage India had expressed serious
interest in the project as it also stood to benefit from it. Had India not
dropped out — as it did last year — the pipeline would have emerged as a
powerful focal point in a region that is emerging as an important site on
the world energy map. The two signatories have kept the door open for
New Delhi that can still join the arrangement at some point. Plans to
reduce the circumference of the pipeline should keep the prospects of
India’s entry in view. Very importantly, Pakistan has displayed a measure
of independence vis-à-vis Washington which has been a persistent
Iran–Pakistan Peace Pipeline 9
opponent of the pipeline deal. With changes in the global equations in the
offing and there being a possibility of a US-Iran dialogue, one can only
say that Pakistan stands vindicated.
Editorial, Dawn (Islamabad), May 26, 2009,
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-
newspaper/editorial/peace-pipeline-at-last-659
India is out for the time being. But Prime Minister Manmohan
Singh, the economist, might realise in his new tenure that nuclear
technology has been trumped by India’s colossal demand for energy.
Today, when the price of oil is $60 a barrel, the deal Pakistan has clinched
looks greatly attractive. Pegged to 80 percent of the price of oil, the gas
Pakistan will get will save it a billion dollars a year. But since these
savings will be in the sector of oil and furnace oil imports the advantage
will be durable. Also, the 2,000 km pipeline, shared half and half by the
two countries, will not go through the troubled area of Khuzdar in
Balochistan but will enter Pakistan from its border near Gwadar and go
to Nawabshah in Sindh, which is the hub of gas pipelines in Pakistan.
Pakistan will receive one billion cubic feet of gas from this pipeline
but will expect India to rejoin the project. But India will have to decide
pretty soon what it wants as the project will start on the ground in 2010.
If India doesn’t, then the pipeline will become forever a two-state pipeline
because of its diametrical size. Pakistan will use this gas for industrial and
power generation (5,000MW) purposes. It seems that the dream of
Pakistan becoming a transit country for gas supply to India and China is
on hold for some time. But the destiny of Pakistan as a transit hub will
not be negated by war forever.
The changing of the name of the pipeline to “peace pipeline” is not
without significance. The signatories, Iran and Pakistan, cannot avoid the
innuendo that “peace” has prevailed after a period of “non-peace”
between the two. And the big development since the beginning of 2009,
when the project was stalled because of pricing difficulties, has been
Pakistan’s final decision to take on the Taliban inside Pakistan. Only a
few months ago, hostile commentators in Pakistan were “noting” the
presence of Iran’s foreign minister in Mazar-e-Sharif as a plot against
Pakistan, but the truth is that Iran was greatly threatened by the
possibility of the return of the Taliban to power in Afghanistan and said
so when its officials recommended that Pakistan stop the Taliban
onslaught in Pakistan.
From the low point when Iranian diplomats were killed in Mazar-e-
Sharif in 1998, Iran-Pakistan relations have come out of their dark patch
this year. The “transit route war” which began with India helping Iran
build the Chabahar port right next to Gwadar is hopefully at an end; and
after Pakistan’s opting for its true role in South Asia, the gas pipeline will
serve to integrate the regional economies. Pakistan’s geopolitical,
significance will be demonstrated to the world after the pipeline is
12 IPRI Factfile
completed and Iranian gas from gas fields near the Gulf is used by
industries right next to the Indian border. After that, Pakistan will not be
able to avoid prosperity, which is the birthright of the people of Pakistan,
by choosing conflict instead of cooperation.
Editorial, Daily Times (Lahore), May 26, 2009,
http://www.dailytimes.com.pk/default.asp?page=2009\05\26\story_26-5-
2009_pg3_1
If all or most of the Iranian gas is used for the power sector, as stated by the
government, then our energy mix will remain lopsidedly dependent on
imported fuel.
After more than a decade of negotiations and many ups and downs,
Iran and Pakistan signed the framework on the Iran-Pakistan ‘peace’
pipeline during President Asif Ali Zardari’s visit to Tehran, pushing the
much-delayed project a notch forward. The gas pipeline project makes
economic sense: Iran has surplus gas to sell and Pakistan needs gas.
But situations, particularly in the extended Southwest Asian region,
don’t always follow economic logic; instead, they are determined by
politics, strategic interests, rivalries and conflicting views, particularly
about Afghanistan.
Since the pipeline project presently concerns Iran and Pakistan, it
would be better to comment on the nature of Pak-Iran ties and whether
or not moving forward with pipeline will also move forward the
somewhat troubled relationship between the two states. The answer lies
in how we read the nature of this relationship and how it is likely to
develop in the context of the larger context of power between a variety of
players — Iran, Afghanistan, Pakistan, India and the United States.
The smiles and tight embraces of diplomats and political leaders of
Iran and Pakistan don’t tell much about the hidden tensions, mistrust and
cloak-and-dagger behaviour between the two countries. All the talk about
common cultural and civilisational roots doesn’t carry much weight for
territorialised nation states, which have their own interests.
It is the conflict or congruence of these interests that can either
cause rifts between states or bring them closer together. And in today’s
world, specific issues drive relations between states like Iran and Pakistan,
and within the context of the larger strategic vision of each country.
Iran–Pakistan Peace Pipeline 13
Gazprom, the largest extractor of natural gas in the world and the largest
Russian company, has indicated an interest in participating in the pipeline
project carrying gas from Iran to Pakistan. Gazprom has more than
adequate experience in the field. By end 2004 Gazprom produced 19.4
trillion cubic feet, or 85 percent of Russia's total gas production.
With reserves of 28,800 cubic kilometres, Gazprom controls 16
percent of the world's gas reserves and after acquisition of the oil
company Sibneft, Gazprom, with 119 billion barrels (18.9 km3) of
reserves, ranks behind only Saudi Arabia, with 263 billion barrels (41.8
km3), and Iran, with 133 billion barrels (21.1 km3), as the world's largest
owner of oil and oil equivalent in natural gas. It supplies gas to European
countries and the European Union as a whole gets about 25 percent of its
gas supplies from this company. However concerns about funding of the
Iran-Pakistan-India (IPI) gas pipeline were attributed to the Bush
administration's resistance to this project which, in turn, resulted in
drying up of many a possible financial source.
The Obama policy on this issue is not yet clear however it is
relevant to point out that Gazprom has the necessary finances to turn this
deal into reality as, apart from its gas reserves and the world's longest
pipeline network (150,000 km), Gazprom also controls assets in banking,
insurance, media, construction and agriculture.
There is speculation that Gazprom's interest in the IPI pipeline
project maybe due to Russia's geo-political considerations: Russia's
resistance to the American supported Central Asia South Asia Regional
Electricity Market (CASAREM) project that is focused on supplying
energy deficient South Asia from energy surplus Central Asia. It maybe
recalled that Gazprom, with the backing of the Russian government,
agreed to purchase all surplus energy from the Central Asian Republics as
a countermove to US efforts to open Central Asia's energy to South Asia.
16 IPRI Factfile
Recent studies have shown that the imported gas would be the most
economical fuel compared with other imported fuels.
Zafar Bhutta, Business Recorder (Islamabad), November 14, 2009,
http://www.brecorder.com.pk/index.php?id=986351&currPageNo=1&q
uery=&search=&term=&supDate=
For over a decade Iran, Pakistan and India (IPI) have took pains at
negotiating a major pipeline deal whereby Iran would send natural gas
from its territory to the region. Yet geopolitical and commercial issues
have repeatedly prevented the deal's fruition despite Tehran's growing
need to diversify gas sales to Asian markets and Asian countries desire to
find a stable, reliable source of gas supplies. In recent years, India’s
participation in this project has become more uncertain, which is partly
responsible for the long delay that the project has suffered to date. Iran’s
repeated attempts to raise the price of gas, US pressure on India to refrain
from participating in the pipeline, external skepticism about Iranian
capability to fill the pipeline as it promises, Indian concerns about the
overall stability of Pakistan, and in particular, the possibility of terrorism
in Pakistan’s Balochistan province through which the pipeline would
travel all contributed to India's angst (Jane’s Intelligence Review,
February 11). Indeed, Iran recently warned India that there is a limit to its
patience in waiting for New Delhi to decide (Thaindian.com, February
9). Iran was apparently able to present this ultimatum because it believes
that it now has the “China card” in its deck. In early February, Iranian
Foreign Minister Manucher Mottaki reportedly said that Iran was ready
to start the pipeline at any time—even without India—and urged Pakistan
not to heed US pressure against the pipeline as China could soon replace
India in the deal (Press Trust of India, February 8).
Background
Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart
Asif Ali Zardari inked a $7.5 billion agreement in Tehran on May 23,
2009 to transfer gas from Iran to Pakistan. According to the deal, Iran
will initially transfer 30 million cubic meters of gas per day to Pakistan,
but will eventually increase the transfer to 60 million cubic meters per
day. The pipeline will be supplied from the South Pars field. The initial
Iran–Pakistan Peace Pipeline 19
capacity of the pipeline will be 22 bcm of natural gas per annum, which is
expected to be raised later to 55 bcm (Zawya.com, February 5).
After many months of negotiations, on February 11, 2010
Islamabad and Tehran were able to finalize the agreement on the issues,
including the issuance by Pakistan of a "comfort letter" that provided
Iran with the assurance that India—or China—could be brought into the
project later. The two parties have vowed to sign the formal agreement
by March 8 in Ankara, Turkey. The News reported:
Under the comfort letter, the government of Pakistan would allow
the third country to import gas through [the] IP [Iran-Pakistan] line in
case any country in future comes to join the project, but the permission
will be subject to the gas tariff and transit fee to be worked out as per best
practices of that time (The News [Pakistan], February 15).
leaving the issue in abeyance (Indian Express, April 15, 2008; The Indian,
June 19, 2008). Subsequently, Pakistani media reports claimed that China
was keen on joining the pipeline and would send a delegation to negotiate
the deal, but clearly, nothing came of it (The Indian, June 26, 2008). In
2009, Iran’s ambassador to India, Seyid Mehdi Nabizadeh, told Indian
journalists that China was interested in the pipeline, but he too refused to
confirm if talks with China were taking place (The Indian, September 15,
2009). Based on this precedent, it may be possible that these Pakistani and
Iranian gambits were spurious to begin with and its purpose was to
pressure India or entice China into joining the pipeline project.
There is considerable interest among external observers in the
pipeline and from Chinese officials have sporadically expressed an interest
in it. For example, China’s ambassador to India in 2006, Sun Yuxi, said
that China has no objections to the IPI, while India’s minister for State
Planning M.V. Rajashekaran, also said that once the pipeline is completed
it could be extended to China. Gazprom and the Russian government
have long since indicated a desire to participate in sending oil and/or gas
to the subcontinent through the IPI (ITAR-TASS, April 17, 2007).
Indeed, one Russian official, Gazprom’s man in Tehran, Abubakir
Shomuzov, has even advocated extending the IPI pipeline to China to tie
Russia, China, India, Pakistan and Iran together in a very big project
having major strategic implications as well as a huge number of
consumers. Presumably, such statements—if not plans—are intended to
mollify Chinese concerns about the possibility of Russian energy being
diverted from it to India (The Hindu [Internet Version], May 7, 2007).
Nevertheless, if one correlates China’s recent maneuvers in Central Asia
concerning pipelines with its deals with Iran, it is clear that China is
contemplating a pipeline network running from Iran either through
Central Asia, or prospectively through Pakistan and/or India to China
(Central Asia Caucasus Analyst, September 19, 2007).
In this context, the IPI pipeline poses several risks and
opportunities for Beijing. If India exited the pipeline, that would lessen
Iran’s leverage to drive a hard bargain on gas prices. At the same time, as
part of the overall strategy to build pipelines from Iran to China, or at
least to Gwadar from where gas or oil could be shipped directly to China,
Chinese participation would create a new overland energy link that could
complement China’s energy diversification strategy. Nevertheless, the
project also faces several political and logistical difficulties that could
scuttle Chinese participation. The pipeline is planned to traverse a very
Iran–Pakistan Peace Pipeline 21
difficult terrain in Pakistan’s Gilgit region. That would increase the costs
and time required to eventually connect the pipeline to Xinjiang.
Moreover, the risks inherent in Pakistan and Iran also pose problems.
The massive investment required to link China to the pipeline would be
susceptible to many risks since it falls along a major fault line of
instability, as there could be large-scale terrorism in the territory of the
pipeline or more generally from a mass civil upheaval in Pakistan. In view
of these positive and negative aspects to the deal, some observers suggest
that Beijing might just be feigning interest in the IPI pipeline to get a
better deal in negotiations with Russia on relatively safer Siberia-China
gas pipelines. Certainly if the prospect of China obtaining a secure and
stable supply of gas from Iran would reduce its need to get that gas from
Russia and give it even more leverage over Russia in the current
negotiations on gas pipelines from Siberia to China than it already
possesses.
There is another aspect to this deal too. China has recently stuck its
neck out for Iran in its call for continuing negotiations with Iran over its
nuclear enrichment programs irrespective of the fact that Tehran is
clearly defying the IAEA and the offers of the six negotiating partners
(United States, Great Britain, France, Germany, and Russia). On
February 24, 2010 Foreign Ministry Spokesman Qin Gang stated that,
"China holds that the parties should continue to step up diplomatic
efforts in a bid to maintain and promote the process of dialogue and
negotiations," said Qin, "China hopes the parties demonstrate more
flexibility and create conditions conducive to a comprehensive and
proper solution to the Iran nuclear issue through diplomatic means"
(China Daily, February 24).
Chinese sources also report that Iran is able to resist the United
States because the political situation in Iran is stabilizing (Xinhua News
Agency, February 24). This suggests a more optimistic view of the
domestic situation in Iran than might be the case elsewhere. Likewise, it
appears that China suspects US motives in the region. High-level visits by
US Secretary of Energy Steven Chu to Saudi Arabia and by another high-
level Israeli delegation to China aim to wean China away from Iran in
return for the United States brokering increased oil exports from Saudi
Arabia to China. The Chinese media apparently considers this a trap to
get China to renounce its principles for transitory economic gain (China
Daily, February 24).
22 IPRI Factfile
Conclusion
At the same time, if China did become a full partner in the IPI pipeline
that would offer it another opportunity to build on Beijing’s so-called
strategy of building what has been called a “string of pearls” across the
Indian Ocean. Chinese officials have publicly stated their desire to turn
the Chinese-built Pakistani port of Gwadar into an energy hub. China
also has substantial interests in overland transport links in Pakistan
through the Karakorum Highway and participation in the IP pipeline
would extend those interests deeper. Indeed, many observers in New
Delhi and Washington view Sino-Pakistani collaborations to build naval
facilities and oil refineries at Gwadar as a prelude to the establishment of
a Chinese naval base there. Whether this is true or not, if China joins the
IPI project, then the odds of China supporting American efforts to isolate
Iran would effectively be reduced to zero because it would depend too
much on Iranian gas, in addition to its recent oil contracts to antagonize
Iran by siding with Washington. While we wait to see how China decides
to play this issue, the United States needs to understand that Beijing's
decision to join or stand aloof from this pipeline will have major
geopolitical repercussions and comparable geo-economic repercussions
across Asia, another sign not only of the integration of south and
southwest Asia with East Asia, but also of China’s rising importance as
the nexus of the Asian continent.
Jamestown Foundation, Stephen Blank, March 5, 2010,
http://www.jamestown.org/programs/chinabrief/single/?tx_ttnews[tt_news]=3
6122&tx_ttnews[backPid]=25&cHash=0e88d5e465
He said the Sui Northern Gas Pipeline Limited (SNGPL) and Sui
Southern Gas Company Limited (SSGC) would be responsible to
complete this project due to having 50 percent share each in IP gas
pipeline project.
Government of Pakistan (GoP) would ensure to provide guarantee
of $3-4 billion investment for Iran-Pakistan (IP) gas pipeline project.
While answering a question, he said no further progress could be
achieved on Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline
project due to insurgencies in the region but hopefully the project would
be launched next month. “We will try our level best to utilise all bilateral
options to finalise this project,” he maintained. …
Zeeshan Javaid, Daily Times (Lahore), March 17, 2010,
http://www.dailytimes.com.pk/default.asp?page=2010\03\17\story_17-3-
2010_pg5_8
“Peace Pipeline”
Pakistani Petroleum and Natural Resources Minister Naveed Qmar
described the signing of the deal as a "milestone towards meeting energy
needs of the country".
The pipeline will connect Iran's South Fars gas field with Pakistan's
Balochistan and Sindh provinces.
Officials say the treaty was delayed because Pakistan had been
unable to arrange funding.
Under the terms of the deal, Iran will provide 750m cubic feet of
gas per day to Pakistan. The line should become operational by 2015.
Each country will be responsible for building the section of
pipeline that runs through its own territory.
24 IPRI Factfile
Labelled the "peace pipeline," the project was first mooted in the
1990s and originally would have extended from Pakistan to India.
Correspondents say that Delhi has been reluctant to join the
project because of its long-running distrust of Pakistan, with which it has
fought three wars since independence in 1947.
India has instead invested in civilian nuclear reactors to help fulfil
its increasing energy demand. It also signed a landmark civilian nuclear
deal with the United States in 2008.
Pakistan has argued that it too should make a similar deal with
Washington, but correspondents say that so far the US has not shown
much enthusiasm.
Under the terms of the deal signed on Tuesday, Pakistan is allowed
to charge a transit fee if the pipeline is eventually extended to India.
Correspondents say the deal is not likely to be welcomed by the US
- because of Tehran's suspected ambitions to build nuclear weapons.
Iran denies any such ambitions.
BBC News, March 17, 2010,
http://news.bbc.co.uk/2/hi/8572267.stm
P IPELINE A GREEMENT
Pakistan and Iran signed the Heads of Agreement (HoA) and Operational
Agreement (OA), in Istanbul, on Tuesday. This, it was revealed, would
bring the laying of the pipeline that would make gas available to fuel-
starved Pakistan, from gas surplus Iran, one step closer. There is little
doubt that if the Iran-Pakistan gas pipeline becomes operational, then
Pakistan's fuel supply woes and the ongoing deeply worrying power
demand-supply gap would be bridged.
However, this particular hapless project has been held hostage to
the signing of non-binding agreements since its conceptualisation and
even after the passage of two decades since it was first proposed, not a
single pipe has been laid to give it even a semblance of reassuring reality.
In this context, Naveed Qamar, who signed the HoA and OA on behalf
of Pakistan, would forgive the country for not considering this a major
landmark achievement.
Pakistan has learned, much to its chagrin, of the many slips
between the cup and the lip as far as this project is concerned. It was first
conceptualised as far back as in 1989 by Rajendra Pachauri, an Indian
national, together with Ali Shams Ardekani, former Deputy Foreign
Minister of Iran, who then proposed it to their governments the
following year.
The pipeline was proposed to start from Asalouyeh (South Pars
Field) and stretch over 1100 kilometers through Iran. In Pakistan, it was
26 IPRI Factfile
to pass through Balochistan and Sindh. The initial capacity of the pipeline
was to be 22 bcm of natural gas per annum, expected to be raised later to
55 bcm, at a cost of US $7.5 billion.
Thence began a series of disagreements between the three
participating countries that created hurdles in the way of its launch. The
first area of disagreement was the price. In July 2006, Iran demanded US
$7.20 per million British Thermal Unit (BTU), a price offer the Indians
claimed was 50 percent higher than the prevailing market price in India
and, therefore, not economically viable.
In 2005, the then Indian Petroleum Minister Mani Shankar Aiyar
announced that his country may withdraw from the gas deal. "We will
not buy gas from Iran if we cannot sell it in India," he is credited with
saying. Aiyar clarified that Iran wanted to charge as much for natural gas
as it does for LNG (about $4 per million BTU), whereas the main Indian
consumers - fertiliser and power sectors - would be unwilling to pay more
than $3 per MBTU.
With the addition of transportation and transit charges to the
Iranian price, the Minister added, the gas would end up costing $4.50 per
MBTU. He also pointed out that as India and Pakistan will need
approximately 200 million standard cubic meters of gas daily, Iran should
offer a special price for such a large order.
In February 2007, the three countries agreed to US $4.93 per
million BTU, however details regarding price adjustment, in case the
international price of gas/alternative fuels rose, was not firmed up and
continued to be a sore point in negotiations. Pakistan has, however,
agreed to the latest Iranian price on offer and one would hope that
appropriate cost-benefit analysis would have been undertaken to ensure
that the gas price is feasible.
The second area of disagreement erupted when India expressed
concern over its energy security with respect to this project, as the
pipeline would have passed through its nuclear rival Pakistan, prior to
reaching India. The implications of this on Pakistan are considerable, as
we would lose over 200 million dollars per annum on transit fees.
And finally, American sanctions against Iran, that have continued
to this day, would imply continuing US pressure for scuppering the deal.
India has already opted out of the project, though all three areas of
disagreement/concern were probably responsible for India abandoning
the project.
Iran–Pakistan Peace Pipeline 27
Balochistan, the size of Texas and that accounts for 44 per cent of
Pakistan and 16 per cent of Iran’s landmass, is a strategically important
area.
By virtue of its energy resources and its location, it is key to the
energy supply to South Asia, including Pakistan. The country’s mounting
energy crisis and the growing demand for energy security in the region
have magnified Balochistan’s economic and strategic importance.
Yet without addressing the grave political challenges in the
province, Islamabad is pursuing an ambitious plan to import one billion
cubic feet (bcf) of gas per day through the 2,100km-long Iran-Pakistan-
India (IPI) gas pipeline.
Balochistan is the only potential land route for the proposed $1.2bn
pipeline. A major part — some 1,500km — of the 2,100km-long conduit
which will connect Iran’s Pars gas field to Pakistan’s main distribution
system in Nawabshah, will cross Baloch territory in Iran and Pakistan.
Islamabad has been pursuing the IPI project since 1993. Initially, a
memorandum of understanding was signed for the construction of an
Iran-Pakistan gas pipeline, a project that India later wished to join. The
project envisaged a 2,670km land pipeline with a 3,620 million cubic feet
per day (mmcfd) gas transmission capacity.
Pakistan and Iran signed the agreement and an operational accord
in Istanbul on March 17. However, it is not clear how these new
agreements are different from the ones inked during President Asif Ali
Zardari’s visit to Tehran in May last year, following which officials from
the newly-formed Inter State Gas System (ISGS) quietly signed the
controversial gas sale-purchase agreement in Istanbul.
28 IPRI Factfile
P IPELINE P OLITICS
must place the interests of its people on a higher priority than the
interests of another country. The pipeline is potentially of prime
importance to the people. There is every reason then to go through with
it, indeed to step up endeavour in this regard, and by doing so send out a
clear message to the world that Pakistan is a sovereign nation which does
not take orders from anyone else.
Editorial, News International (Rawalpindi), April 3, 2010,
http://www.thenews.com.pk/daily_detail.asp?id=232339
U NREALISTIC A DVICE
The United States has once again objected to Pakistan’s deal for a $7.5
billion gas pipeline with Iran and its assistant secretary of state Robert
Blake “advised” Islamabad at a briefing in Washington the other day that
“this is not the right time” to have transaction with Tehran which is in
conflict with the international community over its nuclear programme.
The US itself would not either encourage large investments in any Iranian
project, Blake said. Pakistan and Iran concluded the deal after 14 years of
delayed negotiations over the Iran-Pakistan-India (IPI) gas pipeline project
that concluded last year. Iranian President Mahmoud Ahmadinejad and
his Pakistani counterpart, Asif Ali Zardari, signed the agreement in
Tehran on May 23 for the supply of about 750mn cubic feet of gas a day
to Pakistan by 2014. Pakistan has already appointed a German designer
for the pipeline that would enter Pakistan from its border near Gwadar
area to Nawabshah, which is the hub of gas pipelines in the country. The
56-inch diameter pipeline is 2,700-kilometre in length, covering around
1,100 kilometres in Iran, 1,000 kilometres in Pakistan and around 600
kilometres in India. Islamabad has said it will use Iranian gas for the
generation of some 5,000MW of thermal power and save about $1billion
of import of furnace oil for the purpose. The project initiated in 1995 but
India withdrew last year after the US concluded a civil nuclear deal with
New Delhi. However, Iran and Pakistan have left room for India to join
Iran–Pakistan Peace Pipeline 31
later. This is not the first time that Washington has opposed the project.
The US administration has succeeded in isolating India. It now wants
Pakistan to follow suit at a time when it is suffering a huge power
shortfall and the US administration has committed only peanuts at the
end of recent talks in Washington. Not only the US administration has
virtually declined Islamabad’s request of a civil nuclear agreement to
acquire nuclear energy, it committed a meagre assistance of $125 million
for the up-gradation of powerhouses and transmission lines and only
promised the repair of power stations and 11,000 agricultural irrigation
pumps. The opposition to Iran-Pak gas pipeline in this situation means
that Washington wants Pakistan to continue languishing in dark and
degradation; a client state that is subservient to its imperialist policy of
hegemony. The US is emboldened in its attempt to dictate Pakistan
because no administration here has challenged its designs in more than six
decades; and Pakistan’s spineless foreign policy has always failed in
safeguarding even the most vital of national interests. Producing cheap
electricity is the inalienable right of Pakistan and if Iran is ready to help
in meeting huge power shortage, the US has no business to impede
Pakistan’s way to lessen shortfalls in electricity generation. It would be
ironical if Islamabad concedes to the wish of a country thousands miles
away and ignores the cooperation of a neighbouring state. Pakistan must
dismiss with contempt the Washington plea against the Pak-Iran gas
pipeline as this project is in the country’s interest and no plea is greater
than progress and the prosperity of the people.
Editorial, Frontier Post (Peshawar), April 3, 2010,
http://www.thefrontierpost.com/News.aspx?ncat=ed&nid=68
At last, the cat is out of the bag. The United States, which has been
dropping strong hints of providing financial and technical assistance to
Pakistan in overcoming the ongoing energy crisis, has raised objections to
Islamabad’s deal with Tehran for import of gas. US Assistant Secretary of
State Robert Blake, on his return to Washington from a trip to Pakistan,
Afghanistan and India, told newsmen that the United States has advised
Pakistan to seek other alternatives because of Iran’s dispute with the
international community.
Americans used similar tactics to dissuade India from joining the
trilateral gas pipeline project despite the fact that India’s fast growing
32 IPRI Factfile
economy badly needs energy security. Both India and the United States
used IPI project as a bargaining chip during negotiations on nuclear
accord. In this backdrop, one can understand why the United States,
unlike its previous stand, is showing willingness to discuss the possibility
of nuclear cooperation with Pakistan as well. We would, however, warn
the Government not to fall into the US trap and move swiftly on Iran gas
pipeline project, which is of critical significance for economy of Pakistan.
Our domestic gas reserves are depleting fast and there is no progress
towards implementation of much-talked-about import of gas from
Turkmenistan because of uncertain situation in Afghanistan, which is
unlikely to improve in the near future. The severe shortage of gas
witnessed by the country especially during recent winter is a clear
indication that domestic, commercial and industrial consumers would
continue to suffer for years if no tangible steps were taken to meet the gas
shortage. Pakistan and Iran have spent years in finalizing the deal and
prudence demands that the project should be implemented without loss
of further time as even Chinese have shown interest to fund the project.
Americans have their own interests but Pakistan must steadfastly pursue
things strictly in accordance with its national interests. We hope that the
Government would be able to convey to the United States that the
project has nothing to do with international politics, rather it is a project
of economic significance to Pakistan.
Editorial, Pakistan Observer (Islamabad), April 3, 2010,
http://pakobserver.net/detailnews.asp?id=23691
P IPELINE P OLITICS
month, Iran will supply 750 million cubic feet a day of gas to Pakistan for
25 years. Blake explained that owing to the ongoing dispute between
Tehran and the international community regarding Iran’s nuclear
ambitions, the US is opposed to any large investments in Iranian
projects.
This is yet another issue on which the Obama administration is
echoing the views of its predecessor, George W. Bush. The former
administration too resisted the pipeline and exerted pressure on both
Pakistan and India to abandon the project.
The US government’s decision to wave a stick at the pipeline
project has savvy timing, following the weeklong strategic dialogue in
Washington, where Pakistan was permitted to nibble at a few carrots.
During those discussions, the US reiterated its commitment to helping
Pakistan meet its energy needs, pointing to $125m provided for energy
projects. Far more importantly, Washington did not outright reject
Pakistan’s demand for a civilian nuclear deal akin to the 2008 US-India
civilian nuclear deal (though it did not make any commitments either).
Some analysts have concluded that Pakistan is now faced with a
neat either/or option, which would involve abandoning the pipeline
project in favour of a civilian nuclear deal with the US. Nothing,
however, could be further from the truth. The Iran-Pakistan pipeline will
have profound implications on the geopolitics of energy and the balance
of power in the region. There are many reasons why swapping out such a
complex project, which has been in the works since 1994, for another
energy deal is difficult and inadvisable.
Pakistan is already suffering serious energy shortages, with an
electricity shortfall of over 3,000MW. Only 60 per cent of Pakistani
households currently have electricity, and only 18 per cent have access to
pipeline gas for heating. In short, Pakistan needs the pipeline project,
which is scheduled to be completed within five years, as well as other
civilian energy deals with the US, China and the Central Asian states.
Moreover, a US-Pakistan civilian nuclear deal remains, so to speak,
a pipedream. During the strategic dialogue, Washington entertained
Islamabad’s request, but made no overtures to indicate that it would ever
be fulfilled. It doesn’t help that if a deal were to be negotiated, it would be
saddled with conditions that Pakistan is not prepared to accept, such as
international access to Dr A.Q. Khan and complete disclosure about all
proliferation activities.
34 IPRI Factfile
the stage for trade and investment beyond the energy sector, which are
ultimately the keys to long-term peace with India.
If India refuses to join the pipeline project, Pakistan should push
forth its proposal to secure China’s involvement in the project. The
pipeline could further strengthen Islamabad and Beijing’s ‘all-weather’
relationship for several reasons. The pipeline would be seen as a quid pro
quo for Chinese investment in Pakistan’s energy sector in the form of
two nuclear power reactors pledged in October 2008. China is keen to
secure energy supplies that can be shipped overland since the US Navy
exerts great control over the seas and could interrupt Chinese energy
flows. Further afield, the pipeline project could help ease Sino-Russian
tensions as it would make competition over Central Asian gas reserves
unnecessary.
Given the far-reaching geopolitical ramifications of the pipeline
project, and especially its potential for boosting regional security,
Pakistan should not jump to abandon the project on the US’s directive.
Nor should Islamabad engage in a tit-for-tat dialogue, offering to set aside
the pipeline project for a civilian nuclear deal. Instead, our government
should remind Washington and the international community that
multilateral energy agreements encourage responsible and efficient
consumption and, in the long run, encourage investment and innovation
in clean and renewable energy. The US should not aim to monopolise
foreign investment in Pakistan’s energy sector, not should it stand in the
way of regional energy resource cooperation.
Huma Yusuf, Dawn (Islamabad), April 4, 2010,
http://www.dawn.com/wps/wcm/connect/dawn-content-
library/dawn/the-newspaper/columnists/huma-yusuf-pipeline-politics-440
A gas sales contract between Iran and Pakistan was signed last June
by the presidents of the two countries.
Around 1,100 kilometers of the pipeline would be built in Iran,
while the remaining 1,000 kilometers would be installed in Pakistan.
Kasaeizadeh said in January that according to normal procedures,
Iran is supposed to deliver the gas to the Iran-Pakistan border, and then
Pakistan would be responsible for conveying the export to any potential
customer.
Earlier, in September 2009, Kasaeizadeh mentioned that India also
needs Iran's gas and that Tehran has no problem in signing gas deals with
New Delhi.
India wants the delivery point of its gas imports from Iran to be on
the Pakistan-India border.
The pipeline was originally proposed in 1995, but last year, after
almost 13 years of negotiations India decided to step back.
Press TV, April 12, 2010,
http://www.presstv.ir/detail.aspx?id=123086§ionid=351020103
P AK -I RAN G AS P IPELINE
The Pakistan-Iran gas pipeline is moving ahead despite all the opposition
to it. On Friday a sovereign guarantee for the pipeline was formally
signed in Islamabad, as well as the Gas Sale and Purchase Agreement
between the two countries.
This means that the pipeline, which will start in Asalooyeh in
south Iran, will go ahead without India, which was originally scheduled
to be the terminus of the pipeline, and the main customer for the gas.
However, it has backed out under American pressure, as well as
Iran–Pakistan Peace Pipeline 39
Iran has the world's second largest gas reserves but has struggled for
years to develop its oil and gas reserves.
Iran says it already makes $18 billion annually from production at
10 phases of South Pars but that income could leap to at least $96 billion a
year when all phases are completed. China's National Petroleum
Corporation is developing part of it.
The Islamic republic says it needs around $25 billion a year in oil
and gas industry investment.
Hossein Noghrekar Shirazi, deputy oil minister in charge of
international affairs, told Abrar daily on Sunday Iran's gas production
capacity of 600 million cubic metres per day could rise to 1.1 billion cubic
metres by 2015.
Reuters, June 6, 2010,
http://www.reuters.com/article/idUSKAL63939220100606
Pakistan and Iran on Sunday [June 13, 2010] finalized US $ 7.5 billion gas
project dubbed as a peace pipeline to start supply of natural gas to the
former from 2014.
The landmark agreement was signed by Iran's deputy oil minister
Javad Ouji and Pakistani delegation including among other officials
Secretary Ministry of Petroleum and Natural Resources Kamran Lashari
and Managing Director Inter-State Gas Company Naeem Sharafat in
Tehran.
"Now the project has entered into implementation phase and there
are no further formalities left in way" Naeem Sharafat said.
He said the IP project was another testimony of the long historic
and cordial relations between Pakistan and Iran," the official said.
The pipeline will connect Iran's giant South Fars gas field with
Pakistan's Balochistan and Sindh provinces.
Pakistan has to construct about 700-km pipeline from the border,
traversing along the Makran Coastal Highway to connect with its
existing gas transmission network at Nawabshah. A 42-inch diameter
pipeline is planned to be built, which is estimated to cost US$ 1.65
billion.
The project is crucial for Pakistan to avert a growing energy crisis,
already causing severe electricity shortages in the country and the project
would help generate around 5,000 megawatts of electricity.
42 IPRI Factfile
Under the gas sale and purchase agreement (GSPA), Pakistan will
import about 750 million cubic feet a day (mmcfd) with a provision to
increase it to one billion cubic feet a day (bcfd).
The volume of imported gas will be about 20 per cent of Pakistan's
current gas production and the agreement is for a period of 25 years,
renewable for another five years.
Iran has the world's second largest gas reserves after Russia but has
struggled for years to develop its oil and gas resources.
Sanctions by the West, political turmoil and construction delays
have slowed Iran's development as an exporter.
Iran state television said the pipeline was 1,000 km (620 miles) long,
with about 907 km of it already built.
Pakistan-India (IPI) gas pipeline project was conceived in early
nineties. However, the project could not take off for various reasons,
including the new gas discoveries in Pakistan of Miano, Sawan and
Zamzama, Indian concerns on pipeline security and Iranian indecisiveness
on certain issues.
Pakistan would be allowed under an agreement signed in March to
charge a transit fee if the proposed pipeline is eventually extended to
India.
The project was revived and bilateral Iran-Pakistan Joint Working
Group (JWG) was constituted and the first meeting was held on
December 29-30, 2003 in Islamabad.
News International (Rawalpindi), June 13, 2010,
http://www.thenews.com.pk/updates.asp?id=106575
Iran and Pakistan formally signed on Sunday [June 13, 2010] a $7.5 billion
gas deal, dubbed as a peace pipeline, for supply of natural gas to Pakistan
from 2014.
Under the deal, Iran will export 21.5 million cubic meters (760
million cubic feet) per day of gas to Pakistan.
The signing of the export deal marks a victory-of-sorts for Iran,
which saw the UN Security Council last week pass its fourth round of
sanctions against the Islamic Republic over its nuclear programme.
“This is a happy day,” Iran’s Deputy Oil Minister Javad Ouji told
reporters at the contract signing ceremony.
Iran–Pakistan Peace Pipeline 43
Europe.
Dawn (Islamabad), June 14, 2010,
http://www.dawn.com/wps/wcm/connect/dawn-content-
library/dawn/the-newspaper/front-page/iran-begins-work-on-gas-pipeline-today-
460
Iran has finalized a US$7 billion gas pipeline deal to export natural gas to
Pakistan. The two countries on Sunday formally signed an export
contract that commits the Islamic republic to supplying its eastern
neighbor with natural gas from 2014.
The Iran-Pakistan (IP) pipeline, which has been talked about for 17
years, will connect Iran's South Pars gas field with Pakistan's southern
Balochistan and Sindh provinces and will be crucial in Pakistan's attempts
to ease countrywide electricity shortages.
The deal was signed days after a UN Security Council voted to
tighten sanctions against Iran, but Islamabad believes that these will not
affect the pipeline project.
“As far as our ... project is concerned, it is a commercial agreement
to meet our energy deficit and beyond the purview of this resolution,”
Dawn newspaper reported Abdul Basit, Foreign Office spokesman as
saying.
The United States has sought to dissuade Pakistan and India, which
has also considered joining the project, because of Tehran's nuclear
ambitions.
“We have advised Pakistan to seek other alternatives,” Dawn
quoted Robert Blake, the US Assistant Secretary of State for South and
Central Asian affairs as saying in April. “We do not think it is the right
time for doing this kind of transaction (building the pipeline) with Iran.”
Iran, which has the world’s second-largest gas reserves after Russia,
needs around $25 billion a year in oil and gas industry investment,
according to Reuters. Its gas production capacity of 600 million cubic
meters per day is expected to rise to 1.1 billion cubic meters by 2015, but
sanctions by the West, political turmoil and construction delays have
slowed its development as an exporter.
US Defense Secretary Robert Gates reportedly said before the UN
sanctions vote last week that the UN resolution could clear a way for
individual states and the European Union to block foreign firms
Iran–Pakistan Peace Pipeline 45
expanding Tehran’s oil and gas exports and impose other curbs on
business activity.
The pipeline will provide gas to the power sector to generate about
5,000 megawatts of electricity. Some analysts say it will not be possible
for the government to provide the fuel to domestic consumers due to its
high price, which was one reason behind India's withdrawal from the
project.
Pakistan’s Deputy Energy Minister Kamran Lashari, who was
present at the signing ceremony, said Islamabad will conduct a one-year
feasibility study for building its section of the pipeline, local media
reported. Iran has built 907 kilometers of the pipeline between
Asalooyeh, in southern Iran, and Iranshahr. Iran’s Deputy Oil Minister
Javad Ouji reportedly said that Iran this week will start building the next
300km stretch to the Pakistani border, through the Iranian port of
Chabahar. Pakistan will take three years to build the 700km link from
the Iranian border to Nawabshah, in Sindh province.
“This is a happy day,” Ouji said at the contract signing ceremony in
Tehran, Agence France-Press reported. “After decades of negotiations, we
are witnessing today the execution of the agreement ... to export more
than 21 million cubic meters of natural gas daily from 2014 to Pakistan.”
On May 28, the two countries signed the sovereign guarantee
agreement, which makes effective made Gas Sales Purchase Agreement
(GSPA) signed by the countries last year in Istanbul. Under the GSPA,
Iran agreed to export 750 million cubic feet per day (mmcfd) with a
provision to increase it to one billion cubic feet a day (bcfd) at the rate
equal to 78% of crude oil for the next 25 years.
The pipeline was originally planned to extend from Pakistan to
India in 1993. India walked away from the project last year, but has kept
its options open to join at a later stage. After India's withdrawal, Beijing
has shown interest in building a pipeline through Pakistan carrying
Iranian gas to China. China's National Petroleum Corporation is already
involved in developing the South Pars field.
Pakistan's demand for gas, which is the primary fuel helping run
the economy, has surged to 4.7 billion cubic feet a day (bcfd) against
actual supply of 3.6 bcfd. The country's natural gas reserves, which meet
over 50% of its requirement for energy, have depleted rapidly in recent
years with few hydrocarbon discoveries and decline in production from
46 IPRI Factfile
This week, Iran signed a major long-term gas export contract with
Pakistan and portrayed itself as a reliable supplier for its gas-hungry
neighbors in an apparent response to Washington’s intense diplomatic
efforts to isolate it over its uranium-enrichment program. Despite the
boasting though, the Islamic Republic’s ability to become a significant gas
exporter will be increasingly constrained by the new set of sanctions.
Under the $7.5 billion contract, Iran, with the world’s second-
largest gas reserves (Russia’s reserves are larger), will sell Pakistan 750
million cubic feet per day for 25 years starting in 2014, once the Pakistani
portion of the pipeline is completed. The volume can be increased to 1
bcf/d and the contract can be extended for five additional years.
Tehran has been offering its neighbors gas for years, from Turkey,
Europe and its Arab neighbors in the Persian Gulf, to China as liquefied
natural gas, but differences over pricing, concerns over Iran’s ability to
meet demand, as well as Washington’s pressure over the past years, have
derailed deals one after another.
The timing of the signing of the long-awaited contract with
Pakistan, only weeks after the UN Security Council agreed to a fourth set
of sanctions, is significant. Pakistan has brushed away criticism over the
deal, while Iranian officials have used it to depict the country as immune
to the new measures. Iran will “play a big role in meeting of the energy
security” of the region, Oil Minister Masoud Mirkazemi was quoted:
“Pakistan is an old project. One of the reasons to reemphasize now
is to create the impression they are not isolated and projects are going
ahead as planned,” said Jonathan Stern, director of gas research of the
Oxford Institute for Energy Studies. “The crucial thing now is what
impact the international sanctions have on Iran’s ability to raise money,”
Stern said. “It doesn’t look confidence inspiring.”
Iran current exports gas to Turkey, but it imports more from
Turkmenistan and Azerbaijan to supply its disconnect northern region, a
trend that will continue at least for this year. Its gas production in 2009
reached 12.7 bcf/d, a 13% increase from the year before. But all of that
Iran–Pakistan Peace Pipeline 47
went to meet local demand, which increased in the same period almost
11%, according to the 2010 BP Statistical Review.
The pipeline to Pakistan, which was originally designed to reach
India, was dubbed the Peace Pipeline, and involved building a 1,725-mile
duct from Iran’s huge South Pars gas field, across Pakistan and into
northern India, with both countries splitting 2.12 bcf/d.
India, which was concerned about the pipeline’s security in the
territory of its longtime foe, withdrew after signing a nuclear deal with
the US. Right up to the end, the Obama administration also offered
Islamabad alternatives to Iranian gas imports, including help in building a
re-gasification terminal to buy liquefied natural gas. But Pakistan’s
soaring gas demand and power shortages weighed more. Officials there
say the Iranian gas will power up to 5,000 megawatts of electricity
generation capacity.
Only about 185 miles of the 745-mile gas pipeline in Iranian
territory remain to be built. Additional production from South Pars
which is already in advanced stages of development should allow the
Iranians to meet the Pakistani demand. But the commitment, along with
uncertainty over whether Iran will be able to decrease domestic demand,
make any other major export commitments unlikely in the short term,
especially as sanctions limit the ability to finance the remaining projects
as Western powers target Iranian banks. Iranian banks are resorting to
issuing euro bonds worth about $1.2 billion to jumpstart upstream
projects.
“In theory, it’s feasible to do. But with politics it’s hard to tell,” said
Manouchehr Takin, senior upstream analyst of the Centre for Global
Energy Studies. “Iran has had difficulty buying and paying in
international markets. The US has gone out of its way to twist the arms
of oil companies.”
South Pars has some 450 tcf of gas reserves and currently
produces around 7 bcf/d. Iran plans to develop the field in at least 24
phases to eventually reach around 30 bcf/d, or 81 percent of total
production by the end of the country’s five-year master plan ending 2015.
Meanwhile, officials expect local demand to drop 30% in the same period
as a result of a subsidy reform plan already under way. But few analysts
believe Iran, which is notorious for making empty promises in its energy
sector, will be able to meet the production target, especially as financing
becomes increasingly hard. “History is littered with Iranian contracts and
48 IPRI Factfile
deals to supply gas and most has not happened. The ones that have
ultimately haven’t been a great success,” Stern said.
Western companies have all but frozen their operations as
international pressure has mounted over Iran’s nuclear plans. Asian
companies have picked up much of the work, but analysts doubt foreign
companies will be willing to sink more money into Iran. “Chinese and
Indians are there, but if you look at whole picture has been another
reason of development of South Pars especially has been delayed,” Takin
said.
Indeed, Iran’s Oil Ministry this week signed the six remaining
phases of South Pars with Iranian companies, illustrating the difficulty of
attracting more foreign expertise. Additionally, there are technological
barriers, especially in regards to building the LNG facilities.
“In terms of gas volume, it’s capable of producing required volume
to export. It’s more a case of when these projects are developed. In my
view, implementation will not happen in the five years,” said Colin
Lothian, Middle East upstream analyst with Wood Mackenzie, an energy
consultancy.
Andres Cala, Energy Tribune (Houston), June 16, 2010,
http://www.energytribune.com/articles.cfm/4367/Iran-Pakistan-Gas-Deal-
Boosts-Iran
Qureshi said that Pakistani experts are of the opinion that sanctions
on Iran will not affect gas pipeline project as it is a bilateral agreement
and both countries have already finalized the deal.
He said that gas pipeline deal with Iran will not violate
international laws, adding Pakistan will focus on its interests without
violating international laws.
The Pakistani Foreign Minister said that the visiting U.S envoy
Richard Holbrooke also remained silent when he was asked about the
Iran gas pipeline deal on Saturday.
He said sanctions on Iran have not been imposed for the first time
and that the Islamic republic had also been slapped with curbs three times
before. He added that it is fourth time that Iran has been sanctioned,
adding that if these sanctions have been imposed under chapter 7 of the
UN then all UN members will apply and Pakistan will respect it like
other countries.
The pipeline was initially mooted to carry gas from Iran to
Pakistan and on to India. India withdrew from negotiations last year after
signing a nuclear deal with the United States, but has kept open the
option of rejoining the project at a later stage.
Iran will export more than 21 million cubic metres (742 million
cubic feet) of natural gas daily, according to the deal.
Meanwhile Iranian ambassador in Islamabad Mash' Allah Shakeri
has said the multi-billion Iran gas pipeline has enhanced Pakistan's
strategic importance, particularly in relation to India.
“In addition to the added economic value of billions of dollars, the
Iran gas pipeline agreement has boosted the strategic value of Pakistan in
the region. If there is any third country recipient, they have to recognize
that Pakistan is going to provide a peaceful passage,” Shakeri told Express
Television in an interview.
Mu Xuequan, English News (Beijing), June 20, 2010,
http://news.xinhuanet.com/english2010/world/2010-06/20/c_13359663.htm
The US is apparently using the Pak-Iran gas pipeline deal also as leverage
against both Pakistan and Iran and part of its carrot and stick policy. Mr.
Holbrooke, President Obama’s special envoy to the region, who is
currently visiting Islamabad, told journalists on Saturday that the US had
no objection to Pakistan getting natural gas from Iran since it was facing
an acute energy crisis. The observation was received with mixed feelings
since the energy-starved people of Pakistan’s predicament has been no
secret nor has this affliction struck Pakistanis suddenly; then how come
the US, which has been indicating its disapproval of the deal and has even
managed to convince its new paramour in the region, India to renege on
the deal, now express “no objection”. Indeed a number of Pakistanis were
relieved at the US tacit approval of the deal, but the thinking ones and
those with a penchant for the conspiracy theory were wondering what
could possibly have induced Washington to drop its opposition to the
Iran-Pakistan-India gas pipeline project. After all, neither the fact of the
power shortage, that has been crippling the whole gamut of our life for
nearly three years, was hidden from it nor has the reason of its opposition
to the pipeline project vanished. The Daily Mail still remembers the
intense arm twisting and wrangling on the part of USA over the deal and
in return, the snubs it received from the US, whenever Pakistan raised the
question of a civil nuclear energy deal like the 123 deal between US and
India. Pakistan’s requests were rebuffed by USA, sometimes by raising
the spectre of Dr. Abdul Qadeer Khan’s network and others by flogging
the dead horse of nuclear proliferation.
However, the pleasure and satisfaction of the sanguine group in
Pakistan was short lived as the very next day, Sunday, Richard
Holbrooke flip-flopped and reminded Pakistan that Iran was under
sanctions and this could affect the Pak-Iran gas pipeline deal. The Daily
Mail is wondering what changed overnight for Mr. Holbrooke to recant
his earlier statement. Did he receive fresh “advice” from Washington or
did sweetheart New Delhi whisper sweet nothings in Mr. Holbrooke’s
Iran–Pakistan Peace Pipeline 53
Pakistan will go ahead with a plan to import natural gas from Iran
even if the US levies additional sanctions on the country, Prime
Minister Yousuf Raza Gilani said.
54 IPRI Factfile
IP P IPELINE
The prime minister is supposed to dispel confusion, not create it. But for
a 24-hour period between Sunday and Monday, Prime Minister Gilani
Iran–Pakistan Peace Pipeline 55
caused many to scratch their heads after media reports attributed to him a
pledge to abide by US sanctions against Iran, in contradiction of
Pakistan’s traditional stance of adhering to only UN-imposed sanctions.
Yesterday Mr Gilani rejected the media reports and reiterated Pakistan’s
stance of adhering to only UN-imposed sanctions, but what it has done is
to bring into focus the difficult triangle of US-Pakistan-Iran relations.
At this point, it would be helpful to revisit the economic and
technical basics of the Iran-Pakistan pipeline and the first principles of
geopolitics. Pakistan is a country on the brink of an energy crisis: the
resources that we are currently able to tap may not last another decade.
There are local options, the ‘new’ ones such as figuring out how to tap
the potential of Thar coal and Kohat gas and building more dams, and
‘old’ ones such as extracting more from wells that have been capped. The
problem is there is no direction from the government on energy
planning. Even if there was such planning, at this late stage stopgap
measures would be needed to plug the energy deficit.
Enter options such as the Iran-Pakistan pipeline. The cost and
technical details are massively complex, but some of the ‘conventional
wisdom’ is questionable. For example, will it really cost in the range of
$7bn for Pakistan to build its share of the pipeline? That is a critical
question because Pakistan is unlikely to get any foreign financing for the
pipeline from the IFIs or cheap credit from international credit markets.
Also, is the purchase price agreed unjustifiably high or should Pakistan
view the agreement from the prism of current options, and the cost of
not doing anything on the energy front?
Getting answers to these questions is where Mr Gilani’s energies
should be directed, rather that speculating about sanctions. American
disapproval for the pipeline is clear and the US will continue to flex its
diplomatic muscle, but thus far it has avoided presenting Pakistan with a
fait accompli. Potential American sanctions against Iran have not been
linked to Kerry-Lugar aid nor do they specifically bar projects such as the
IP pipeline. And if the American side does try and squeeze Pakistan
diplomatically, Pakistan’s response should be: how exactly will an energy
crisis here help the fight against militancy?
Editorial, Dawn (Islamabad), June 23, 2010,
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-
newspaper/editorial/21-ip-pipeline-360-sk-01
56 IPRI Factfile
Y IELDING TO P RESSURE
revolution.
Daily Times (Lahore), June 27, 2010,
http://www.dailytimes.com.pk/default.asp?page=2010\06\27\story_27-6-
2010_pg5_6
Pakistan will construct about 780-km, 42” diameter pipeline from the
border, traversing along the Makran Coastal Highway to connect with its
existing gas transmission network at Nawabshah, said Naim Sharafat,
MD, Interstate Gas Systems (Pvt) Ltd (ISGS) here on Wednesday.
Briefing the Senate Standing Committee for Petroleum and Natural
Resources about the status of the Iran-Pakistan Pipeline project, he said
almost 665-km of the pipeline will pass through Balochistan while about
115-km of the pipeline will be laid in the Sindh province, he said.
This was the first Senate Committee meeting held at SSGC since
Iran and Pakistan inked the historic agreement in Tehran in June 2010 for
the supply of natural gas to Pakistan from 2015.
The meeting was chaired by Sabir Ali Baloch, the Standing
Committee Chairman. Naim Sharafat, MD, ISGS who was accompanied
by his CFO Mobin Saulat dilated on the salient features of the 1,150 km
pipeline, which will connect Iran’s South Pars gas field with Balochistan
and Sindh provinces.
The estimated cost of Pakistan segment is $1.2 billion to be
incurred over a 4-year period, Mr. Sharafat added.
He further explained the project is planned to be funded at a debt-
equity ratio of 70:30 requiring an equity investment of $373 million and
debt financing of $872 million. Mr Sharafat said the project’s debt portion
is expected to be secured from a combination of domestic and
international financiers including Sindh and Balochistan governments,
SSGC, SNGPL, OGDCL, PPL, PARCO and NBP (whose contribution
will be $190 million or 51% of equity structure) as well as potential
private investors including Petronas and Gazprom (whose contribution
will be $183 million or 49% of the equity structure). MD, ISGS stated
that under the Gas Sale and Purchase Agreement (GSPA), Pakistan will
import 750 mmcfd gas with a provision to increase it to one billion cubic
feet a day (bcfd).
The senators suggested that the stakeholders in the routes traversing
the pipeline must be taken into confidence, majority of which are remote
and less developed areas, with clear-cut assurances for the provision of
new schools, hospitals and vocational training centres. In response to the
senators’ queries, MD, ISGS said that being one of the largest
infrastructure projects the country has ever seen, the IP project will create
62 IPRI Factfile
The Pakistani segment of the gas pipeline from Iran will cost $1.2
billion and work will be completed in four years, an official said.
Managing Director Interstate Gas Systems, Naim Sharafat, said the
project is planned to be funded through a debt-equity ratio of 70:30,
requiring debt financing of $872 million and equity investment of $373
million. The Interstate Gas Systems is a joint venture of Sui Southern Gas
Company and Sui Northern Gas Pipelines.
He was giving a presentation to the Senate standing committee for
Petroleum and Natural Resources on the status of Iran-Pakistan gas
pipeline project at the Sui Southern Gas Company (SSGC).
This was the first Senate committee meeting at the SSGC since Iran
and Pakistan inked the historic agreement in Tehran in June for the
supply of natural gas from 2015.
Chairman Standing Committee Sabir Ali Baloch chaired the
meeting, which discussed salient features of the 1,150-kilometre pipeline
that will connect Iran’s South Pars gas field with Balochistan and Sindh
provinces.
Sharafat said the project’s debt portion is expected to be secured
from domestic and international financiers including Sindh and
Balochistan governments, Sui Southern Gas Company, Sui Northern Gas
Pipelines, Oil and Gas Development Company, Pak Petroleum, Pak-
Iran–Pakistan Peace Pipeline 63
Arab Refinery Company and National Bank. The NBP will contribute
$190 million or 51 per cent of equity structure.
Besides, potential private investors include Petronas of Malaysia and
Gazprom of Russia which will contribute $183 million or 49 per cent of
the equity structure.
Further elaborating, Sharafat said Pakistan will construct about a
780-kilometre 42-inch diameter pipeline from the border, traversing along
the Makran Coastal Highway to connect with existing gas transmission
network at Nawabshah. Almost 665 km of the pipeline will pass through
Balochistan while about 115 km of the pipeline will be laid in Sindh.
He said under the Gas Sale and Purchase Agreement (GSPA),
Pakistan will import 750 million cubic feet per day (mmcfd) of gas with a
provision to increase it to one billion cubic feet a day (bcfd).
The senators suggested that the stakeholders in the pipeline routes
must be taken into confidence, majority of which are remote and less-
developed areas, with clear-cut assurances about providing new schools,
hospitals and vocational training centres.
In response to queries, the MD Interstate Gas Systems said being
one of the largest infrastructure project, the Iran-Pak pipeline will create
new job opportunities in the provinces of Balochistan and Sindh, thus
improving income level and standard of living of citizens.
Sharafat stated the Gas Sale and Purchase Agreement was broad
enough to allow force majeure in the event the project is hampered due to
United Nations sanctions on Iran. He said in case the project does not
materialise, a liquefied natural gas terminal will be set up at Gwadar to
allow re-gasified LNG to the system.
Giving the current status of the project, Sharafat said a detailed
route survey was in progress to pave the way for engineering and design
of pipeline facilities.
Later talking to media, the chairman Senate committee said it was
important that the project start as soon as possible to bridge the rising
natural gas demand-supply gap.
Ghazanfar Ali, Express Tribune, July 8, 2010,
http://tribune.com.pk/story/26363/pak-portion-of-iran-gas-pipeline-to-cost-1-2b
64 IPRI Factfile
also be approached to raise the money. The National Bank will also
contribute $190 million, or 51 percent, to the equity structure.”
“In case the project does not materialise, an LNG terminal will be
set up in Gwadar to allow re-gasified LNG to the system.”
The total length of the pipeline from Iran to Pakistan is 1,900
kilometers. Iran has already started the construction despite sanctions.
There are different routes being considered for the project, but the likely
route would be through the restive Balochistan’s Gwadar district.
Pakistan depends heavily on the natural gas to run factories and
households. Gas makes up nearly 50 percent of its total energy
consumption. But demand has surpassed supply in recent years as existing
wells deplete.
Production stands at 4 billion cubic-feet per day, while demand
stands at around 4,800mmcfd, according to some estimates. Pakistan seeks
to import 750mmcfd from Iran.
Lashari said that by the time Pakistan starts importing gas from
Iran in 2015, the demand would have doubled to 8 BCF. “There would be
a need to import much more.”
Security of the Iran-Pakistan gas pipeline remains a big issue. Baloch
militants, who demand greater provincial autonomy, attack gas pipeline
infrastructure regularly.
Chairman of the committee Senator Sabir Ali Baloch said that the
project would remain on track despite the security problems. “We will
have to address the grievances of the locals.”
Saad Hasan, News International (Rawalpindi), July 8, 2010,
http://www.thenews.com.pk/daily_detail.asp?id=249452
A direct land route to supply India with gas from Iran is the most
economically feasible option, an adviser to Iranian energy officials said in
Tehran.
Asghar Soheilipour, an adviser to officials at the National Iranian
Gas Co., said New Delhi was considering importing Iranian natural gas
through an undersea route.
He cautioned, however, that a direct route through Pakistan is the
cheapest option for India, Iran's state-funded broadcaster Press TV
reports.
Iran–Pakistan Peace Pipeline 67
Iran and Pakistan have agreed to build a pipeline from the South
Pars gas field in the Persian Gulf. Soheilipour said that option was the
most efficient route.
Indian officials said they were interested in having Turkmenistan
export gas to northern Iran in a swap for exports through an underwater
pipeline. That pipeline, part of broader South Asian initiative, would
diminish the need for the overland plan from Iran.
The undersea option was raised during a May visit to New Delhi by
Turkmen President Gurbanguly Berdimuhamedov. The Turkmen
president before his trip called for the independent launch of the
Turkmenistan-Afghanistan-Pakistan-India pipeline, another rival to Iran's
pipeline to Pakistan.
Washington opposes any of the projects for its allies in Pakistan and
India that include Iran.
UPI Asia, July 9, 2010,
http://www.upiasia.com/Science_News/Resource-
Wars/2010/07/09/Tehranpressing-India-on-land-gas-pipeline/UPI-
20161278685538/
Pakistan is going ahead with the gas pipeline project with Iran despite the
US warning as Islamabad's understanding of the Comprehensive Iran
Sanctions Accountability and Divestment Act, 2010, is that it does not
impact the long-awaited collaborative venture that is crucial to the
country's energy requirements.
“We analysed the new law passed by the US Congress and our
opinion is that it does not affect the Iran-Pakistan gas pipeline as the
sanctions are restricted to investment in petroleum refinement besides oil
and gas sectors, said an official. Also, this is an agreement between two
governments and Pakistan is exporting; not importing or investing in
Iran.
Consequently, both countries are proceeding as per the agreed
schedule. Iran is constructing the last 300-km stretch of the pipeline from
Iranshahr to the Chabahar port and Pakistan is conducting the feasibility
study on its leg of the pipeline from the border with Iran to Nawabshah,
the hub of the country's gas pipelines in the province of Sindh.
On his last visit to Islamabad mid-June, U. S. Special Representative
to Afghanistan and Pakistan Richard Holbrooke had said there was a
68 IPRI Factfile
The last trilateral meeting on the IPI issue involving Iran, Pakistan
and India was held in July 2007.
“What has not been understood is that the talks were stalled on the
question of Iran suggesting an alternate pricing formula. There has to be
further discussion on this,” Sundareshan said. “This is a major issue which
is to be resolved. Once this is resolved the question of transit fee with
Pakistan and transportation tariff will be taken up with Pakistan.”
Some 60 million standard cu. m a day (mmscmd) of gas likely to
flow through the pipeline daily may be equally divided between India and
Pakistan. The pricing formula for the gas, linked to the Japanese crude
cocktail price, is for the gas reaching the Iran-Pakistan border from the
source. A further price escalation is expected because of transit rights and
transport tariff to be paid to Pakistan by India.
Talks on the 2,300km pipeline started in 1995, but have been
delayed over price and transportation fees India would have to pay
Pakistan. While India’s clinching of the civilian nuclear agreement with
the US slowed the process, Iran and Pakistan decided to go ahead with
the project without India, and have even extended a partnership offer to
China.
“There have been no talks on IPI for more than two years. In June,
the Iranians had informed us that they were interested in holding talks,”
said another senior petroleum ministry official who did not want to be
named.
India has recently warmed up towards Iran to court the energy-rich
Islamic republic with whom New Delhi has shared uneasy ties of late.
The two also recently held a meeting of the India-Iran joint commission—
a panel that explores ways to boost economic ties between the two
countries—after a gap of 16 months.
Iran is facing a fresh set of international economic sanctions for
refusing to end its nuclear programme. Ironically, India, which is heavily
dependent on energy imports, last week criticised the “extra-territorial
nature” of the censures—without naming the US—saying the sanctions
would “have a direct and adverse impact on Indian companies” and on
India’s energy security.
While Iran has the world’s second largest oil and natural gas
reserves, India is the world’s fifth largest energy consumer and imports
75% of its needs, accounting for 3.5% of global energy consumption. The
trade between India and Iran, is around $15 billion.
70 IPRI Factfile
Pakistan's growing energy needs and Iran's pool of energy resources make the
two states natural economic partners, and served as the impetus behind the
proposed gas pipeline, initially planned to include India as well.
Pakistan recently decided to move forward with a gas pipeline
project with Iran, despite warnings from the United States that
involvement could subject Pakistani companies to new United States
sanctions. In an e-mail interview, Harsh V. Pant, lecturer in the
Department of Defense Studies at King's College of London, explains the
pipeline's significance in the context Pakistan-Iran relations.
WPR: What are the driving interests for both parties in this pipeline
project?
Harsh V. Pant: Pakistan's growing energy needs and Iran's pool of energy
resources make the two states natural economic partners, and served as
the impetus behind the proposed gas pipeline, initially planned to include
India as well. Facing an energy crisis that is having a damaging impact on
the Pakistani economy, and with its domestic supplies of natural gas
declining, Pakistan has now finalized the pipeline deal with Iran, despite
Washington's demands to the contrary.
Pakistan's annual royalties from this project are expected to be
between $500 million and $600 million. The project, if finalized, would
Iran–Pakistan Peace Pipeline 71
also represent a major boost to Iran's efforts to prevent its global isolation
and economic marginalization, at a time when the West is imposing
strong sanctions over Tehran's nuclear program.
Islamabad has shrugged off the United States’ unilateral punitive measures
against Tehran, saying sanctions will have no bearing on the Iran-
Pakistan gas pipeline project.
“The proposed project would be completed before 2014 as decided
by the two countries in an agreement,” a Press TV correspondent
reported Pakistan’s Foreign Ministry spokesman Abdul Basit as saying on
Tuesday.
He added that the US bans will not affect the multi-billion-dollar
contract on the import of natural gas from Iran.
The comments come a week after Pakistani Prime Minister Yousuf
Raza Gilani chaired a high-level meeting to finalize a strategy under
which the Pak-Iran gas pipeline is to be laid.
Gilani received a briefing from the petroleum and natural resources
officials and asked relevant authorities to finalize the project in no time.
After facing opposition by its front line ally on the so-called global war
on terror, Pakistan has made it clear to the US that the pipeline, which
will connect Iran’s South Pars gas field with Pakistan’s Balochistan and
Sindh provinces, is essential to meet its energy needs.
The US administration tried to block the deal to put more
economic pressure on Tehran over its nuclear program.
On June 12, the energy-starved South Asian country penned a gas
pipeline deal with neighboring Iran under which Tehran agreed to deliver
21.2 million cubic meters (750 million cubic feet) of natural gas per day to
Pakistan from 2014.
Last month, US President Barack Obama’s special envoy to
Afghanistan and Pakistan Richard Holbrooke announced that
Washington had sought to dissuade Islamabad from signing the deal, amid
plans to intensify pressure on Iran.
Pakistan shrugged off the call, with Gilani saying Pakistan is “not
bound to implement US decisions.”
Iran, however, has completed the construction of more than a third
of the 2,600-kilometer gas pipeline, which is estimated to cost $7 billion.
July 16, 2010,
http://pakistanledger.com/2010/07/16/ip-pipeline-one-third-completed/
Iran–Pakistan Peace Pipeline 73
G AS P IPELINE P ROJECT , “T O D O OR N OT T O D O ”
not to over commit itself till the new legislation regarding the energy
sector of Iran is drafted. He has told Pakistan that the US Congress will
come with the new legislation that may apply to the project and has
warned Pakistan in the clear words that the legislation may have vital
implications for Pakistani companies. It was the tenth visit of Richard
Holbrooke since Barack Obama appointed him in this region.
However the Pakistani Foreign Minister, Shah Mahmood Qureshi
in his news conference at Multan airport on Sunday said that although
Pakistan is facing an acute dearth of energy but coming up with any final
statement on the issue will be premature. If this agreement comes under
UN sanctions then the course of action will depend upon the
circumstances and they will not violate any international law.
One wonders that on Saturday during a press conference with the
Pakistani Foreign Minister Holbrooke was saying that the US had no
objections against the pipeline project. But the very next day he retreated
from its earlier stance.
Well in a recent interview the Irani ambassador Masha Allah Shakri
told the Pakistani anchor that America has high stakes in Iran.
Geographical importance of Iran is above board.
The general opinion is that not only in Iran but in the whole Mid
East America has its interests. Just look at a report of New York Times,
the American experts have discovered in Afghanistan huge underground
reserves of minerals. There is copper, iron, cobalt and light weight
Lithium. Lithium reserves are greater than the biggest Lithium exporter,
Bolivia. The global media points out that actually America wants to
exploit the resources of Afghanistan and other countries of Mid East.
Masha Allah Shakri in a blatant tone has questioned the validity of the
right to America for becoming the guardian of peace in this region. He
said America came in Afghanistan with the plea to solve the problem of
narcotics, eradication of poverty, good governance and economic uplift.
However none of these objectives have been so far materialized. It was
indeed baffling to listen to the audacity of his stance. Hence keeping all
these facts in mind it would not be difficult to discern why America
revoked his earlier view on gas pipeline project.
The Pak Iran gas agreement involving $7b was signed on 13 June in
Tehran. According to it for 25 years Iran will export 1 million cubic
meters of gas to Pakistan per day from 2014. On the very next day, the
work started to lay the pipeline from Iran to the Pakistani frontier. The
length of the said pipe line is 300 kilometers.
Iran–Pakistan Peace Pipeline 75
Pakistan retreats? It must ask for nuclear reactors along with the transfer
of technology for production of power to meet its starving energy
situation.
Shanzeh Iqbal, July 22, 2010,
http://www.pakspectator.com/gas-pipeline-project-“to-do-or-not-to-do”/