The Tale of Two Gas Pipelines

Clinton’s remarks were in response to Congressman Rep Lewis asking the US secretary of state why the budget request for the State Department included a $1 billion request to help Pakistan address its energy problems.

Secretary Clinton said the Turkmenistan pipeline was a better alternative, predictable and will avoid business with Iran. She added that embarking on the construction of a Pakistan-Iran pipeline is in violation of the Iran sanctions act. ‘We all know what the consequences of that law are’ she added. Secretary Clinton added that this move would be particularly damaging for Pakistan because the country’s economy is already ailing and would further undermine Pakistan’s economic status.

Two days later, while addressing industrialists and the business community in Multan Chamber of Commerce, Nina Maria, the US consulate general in Lahore said: ‘Pakistan should better find solutions domestically for their energy crisis than going for the Iran-Pakistan gas pipeline.’

Emphasising on alternative sources of energy, Maria said that the US government has donated $15 million for thermal power stations which will be constructed in Muzaffargarh. The project would generate about 1,400 megawatts of electricity and will be completed in November 2012.

The US consulate general was of the view that the pipeline was three years away from being completed and it wasn’t something that Pakistan had to move on immediately.

‘You have other domestic programmes which can be easily upgraded. You can work on them with co-ordination from us before considering the I-P gas pipeline to alleviate the country’s energy woes.

US Secretary of State Hillary Clinton while Addressing the House Appropriations Subcommittee on Foreign Operations has said that Washington has made it clear to Islamabad that the proposed Iran-Pakistan pipeline could raise serious concerns under the Iran Sanctions Act. She further said that the US favoured the alternative Turkmenistan pipeline for Pakistan.
try’s energy woes.

‘Ultimately Pakistan will have to solve its own problems and find its own answers,’said Maria.
However, Pakistan in response to this stance of the US has reasserted its firm resolve and commitment to cooperation with Iran, particularly in the energy sector, as the US renewed its opposition for the multibillion dollar Iran-Pakistan (I-P) gas pipeline project.

‘We are a sovereign country and we will do whatever is in the interest of Pakistan,’Prime Minister Yousaf Raza Gilani said while responding to a question on ‘Prime Minister Online’ a programme hosted by Pakistan Television and Waqt News.

The prime minister said that while Pakistan wants to expand ties with the US on the basis of mutual interest and respect, the US should refrain from interfering in Pakistan’s internal affairs.

Earlier, a more direct Foreign Minister Hina Rabbani Khar said projects with Iran were in the national interest of Pakistan and will be completed irrespective of any external pressures.

‘All of these projects are in Pakistan’s national interest and will be pursued and completed irrespective of any extraneous considerations’ the foreign minister said at a press conference at the Foreign Office.

‘As far as our bilateral relations and co-operation is concerned, we do not make it contingent on views and policies of any third country. All friends of Pakistan must understand our energy needs.

‘We cannot afford to be selective. However, we want to add the element of credibility with the US’ said Khar.

She did not, however, explain how Pakistan would respond if the US did penalise Islamabad in case it went ahead with the project.

‘We’ll cross the bridge when it comes’ Khar said.

Whether Pakistan will restrain the US pressure or not? , no one is in a position to give the correct answer . Should Pakistan make the issue as a matter of its national soverengnity? Or just look it as an economic problem and go for its own economic interests? To find the correct answer we have to first look into the details of the both projects.

The Trans-Afghanistan Pipeline (TAP or TAPI) is a proposed natural gas pipeline being developed by the Asian Development Bank. The pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India. The abbreviation comes from the first letters of those countries. Proponents of the project see it as a modern continuation of the Silk Road. The Afghan government is expected to receive 8% of the project’s revenue.

The roots of this project lie in the involvement of international oil companies in Kazakhstan and Turkmenistan in early 1990s. As Russia, who controlled all export pipelines of these countries, consistently refusing to allow the use of its pipeline network, these companies needed an independent export route avoiding both Iran and Russia.

The original project started on 15 March 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan for a pipeline project was signed. This project was promoted by Argentinian company Bridas Corporation. The U.S. company Unocal, in conjunction with the Saudi oil company Delta, promoted alternative project without Bridas’ involvement. On 21 October 1995, these two companies signed a separate agreement with Turkmenistan’s president Saparmurat Niyazov. In August 1996, the Central Asia Gas Pipeline, Ltd. (CentGas) consortium for construction of a pipeline, led by Unocal, was formed. On 27 October 1997, CentGas was incorporated in formal signing ceremonies in Ashgabat, Turkmenistan, by several international oil companies along with the Government of Turkmenistan.

Since the pipeline was to pass through Afghanistan, it was necessary to work with the Taliban. In 1997 the  then U.S. ambassador to Pakistan, Robert Oakley, moved into CentGas. In January 1998, the Taliban, selecting CentGas over Argentinian competitor Bridas Corporation, signed an agreement that allowed the proposed project to proceed. In June 1998, Russian Gazprom relinquished its 10% stake in the project. On 7 August 1998, American embassies in Nairobi and Dar es Salaam were bombed under the direction of Osama bin Laden, and all pipeline negotiations halted, as the Taliban’s leader, Mohammad Omar, announced that Osama bin Laden had the Taliban’s support. Unocal withdrew from the consortium on 8 December 1998, and soon after closed its offices in Afghanistan and Pakistan.

The new deal on the pipeline was signed on 27 December 2002 by the leaders of Turkmenistan, Afghanistan and Pakistan. In 2005, the Asian Development Bank submitted the final version of a feasibility study designed by British company Penspen. ‘Since the US-led offensive that ousted the Taliban from power,’ reported Forbes in 2005, “the project has been revived and drawn strong US support” as it would allow the Central Asian republics to export energy to Western markets “without relying on Russian routes”. Then-US Ambassador to Turkmenistan Ann Jacobsen noted that: “We are seriously looking at the project, and it is quite possible that American companies will join it.” Due to increasing instability, the project has essentially stalled; construction of the Turkmen part was supposed to start in 2006, but the overall feasibility is questionable since the southern part of the Afghan section runs through territory which continues to be under de facto Taliban control.

On 24 April 2008, Pakistan, India and Afghanistan signed a framework agreement to buy natural gas from Turkmenistan. The intergovernmental agreement on the pipeline was signed on 11 December 2010 in Ashgabat.

The 1,735 kilometres (1,078 mi) pipeline will run from the Turkmenistan gas fields to Afghanistan. Most of sources report that the pipeline will start from the Dauletabad gas field while some other sources say that it will start from the Lolotan gas field.

In Afghanistan, the TAPI will be constructed alongside the highway running from Herat to Kandahar, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border between Pakistan and India.

For security reasons, the Asian Development Bank had proposed alternative routes in Afghanistan. One alternative was through Taskepri in Turkmenistan to Shebarghan and then through Balakh, Mazar-i-Sharif, Samangan, Kabul and Jalalabad in Afghanistan, and Peshawar, Nowshera, Islamabad and Lahore in Pakistan to India. Another alternative was a route through Serhetabat, Shindand, Delaram, Kandahar, Quetta, Lora Lai, Dera Ghazi Khan and Multan.

The pipeline will be 1,420 millimetres (56 in) in diameter with a working pressure of 100 standard atmospheres (10,000 kPa). The initial capacity will be 27 billion cubic meters (950 billion cubic feet) of natural gas per year of which 2 billion cubic meters (71 billion cubic feet) will be provided to Afghanistan and 12.5 billion cubic meters (440 billion cubic feet) to each Pakistan and India. Later the capacity will increase to 33 billion cubic meters (1.2 trillion cubic feet). Six compressor stations would be constructed along the pipeline. The pipeline was expected to be operational by 2014.

The cost of the pipeline is estimated at US$7.6 billion. The project is to be financed by the Asian Development Bank.

Iran-Pakistan Gas Pipeline between energy deficient Pakistan and energy rich Iran is a feasible and doable project, but it has been lingering since 1995 when an MOU was signed to construct the pipeline between Pakistan and Iran. The project was designed to deliver natural gas from Iran to Pakistan and India. The 2775 km (approximately 1100 km in Iran, 1000 km in Pakistan and 600 km in India) long pipeline was proposed to emanate from South Pars gas field and pass through Bandar-Abbas, Khuzdar, Sui to Multan and then to Delhi, at an estimated cost of US $ 7.5 billion. India had proposed an alternative route along the coast. The project was termed as the ‘peace pipeline’ as it was hoped that it would help in obliterating old rivalries and ‘pipeline diplomacy’would bring peace to the region.

The Iran-Pakistan Working Group was formed in 2003 to move the project forward. Islamabad had told Tehran that, in case India was not willing to join, Iran-Pakistan gas pipeline should be pursued as an independent project; but, in 2005, an MOU was signed to include India in the project. In 2007, India and Pakistan provisionally agreed to pay Iran US $ 4.93 per million British thermal units, but India subsequently withdrew from the deal ostensibly over concerns about the price and security. 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.

Earlier, in 2008, Iran had also expressed its interest to provide gas to China, whose response is yet to be ascertained.

In spite of U.S. opposition, Pakistan and Iran signed an agreement for the pipeline on March 16, 2010 at Ankara; and in Tehran, the Iranian President Mahmoud Ahmadinejad and Pakistani President Asif Ali Zardari signed the Inter Governmental Framework Declaration on May 24, 2009. After the signing ceremony of the sovereign guarantee agreement, Pakistan’s Minister for Petroleum and Natural Resources said that the Gas Sale and Purchase Agreement between Pakistan and Iran was for the import of 750 million cubic feet daily of natural gas with a provision to increase it to one billion cubic feet per day. Hopefully, the gas will be available to Pakistan by 2014.

After going through the details of both the pipelines one can easily understand that under the present circumstances the Iran Pakistan Pipeline is a better option for Pakistan. Smooth process of implementation from now on to its completion will do credit to the government. Most important, given the power shortfall we are facing, it would turn out to be a real blessing for us. The gas would be used for energy generation and would add 5000MW of energy to the national grid. Though by the time the pipeline becomes operational, our supply and demand gap would have also increased, it would ensure that the situation remains under control.

Concurrently, one cannot help but think of the US, which had been opposing the IPI tooth and nail on account of its standoff with Iran. It has left no stone unturned to stymie the project ever since it was conceived. As part of its design to isolate Iran, it persuaded Islamabad and New Delhi to opt for the unrealistic Turkmenistan-Afghanistan-Pakistan-India pipeline instead, despite knowing that the unrest in Afghanistan was a big hindrance. Following the US agenda, India at present has decided to quit; however, it is heartening to note that Pakistan and Iran have planned to go ahead. If the past is any guide, the US will definitely try to sabotage the project for which caution is a must.

By: Zaheer Ahmad Anjum

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