The politics of pipelines

Some 10 years ago, the federal cabinet was examining the possibility of selling surplus power to India. Today, thanks to the Musharraf regime’s criminal neglect of this sector, we are facing a crippling power shortage.

Islamabad has little to show for its efforts to secure energy sources over the years, apart from signing numerous memorandums of understanding.
As far back as 1993, an MOU was signed to construct the Iran-Pakistan gas pipeline project that India later wanted to join. It envisaged a 2,670km land pipeline with a 3,620 mmcfd gas transmission capacity.

A year later, an MoU was signed to bring gas from Turkmenistan through Afghanistan. In 2002 an agreement envisaging a pipeline over 1,271km up to Multan was also signed. It enjoyed US support, but continuing turmoil in Afghanistan, coupled with Turkmenistan’s inability to provide convincing proof of its gas reserves, is preventing progress. Then there is the Qatar-Pakistan pipeline under consideration since April 1992.

Many experts are convinced that it is only the IPI project that is technically viable and economically attractive. But US opposition has prevented any concrete movement on it. In the past year or so, India has lost some of its ardour for it, partly because of the US civilian nuclear deal and partly because of the high price demanded by Iran.
The Pakistani leadership claims to be committed to it, pointing to the presence of Presidents Zardari and Ahmadinejad at the signing ceremony of the gas sale agreement earlier on.

However, a recent controversy is causing concern. The petroleum adviser has resigned a couple of weeks after his startling disclosure that two countries, one western and the other in the Middle East, were applying pressure on Pakistan to abandon the project.

This had come as a rude shock to those who were reminded that the Indian petroleum minister Mani Shankar Aiyar had been eased out soon after his public defence of the project. No less significant was a news report that the country’s premier intelligence agency had expressed its reservations with the project, suggesting that Pakistan look for other options. Now we hear that the entire issue may be placed before parliament where it could be lost in debate for years.

Have we succumbed to external pressure and abandoned the only ‘doable gas pipeline project? The nation deserves to know. In the meanwhile, the world’s major powers are engaged in a frantic search to secure assured sources of energy by building transmission lines to move gas from the energy-rich Gulf and Central Asia to energy-starved Europe.

The latest to be launched is the Nabucco project, for which many of Europe’s statesmen gathered in Ankara last month. They were joined by US special envoy on Eurasian energy issues, Richard Morningstar, who some 10 years earlier had been instrumental in getting everyone on board the Baku-Tbilisi-Ceyhan Oil Pipeline project despite Russia’s opposition.

The 3,300km Nabucco project, signed by Turkey, Austria, Bulgaria, Romania and Hungary, is estimated to cost $11bn and is projected to transport Central Asian gas bypassing Russia, going via Turkey to Austria and Germany through Bulgaria, Romania and Hungary. With four entry points into Turkey, it will ultimately tap gas from diverse sources and pump enough gas to meet five to 10 per cent of the European Union’s needs.

However, it is Iran’s involvement that makes the Nabucco pipeline so intriguing, for it will make it the transit corridor for Turkmenistan gas that will eventually go into the pipeline. For this, Iran has entered into an arrangement with Turkmenistan, with the two agreeing that instead of constructing a pipeline from Turkmenistan along the bottom of the Caspian Sea, they would transport Turkmen gas to Europe via existing pipelines to Turkey.

This means that Tehran has decided that while Washington explores how to rebuild relations with it, it can forge a strategic partnership with Europe, a view confirmed by the Turkish energy minister.

The Nabucco project represents a setback for Russia, as it will enable Europe to diversify its energy supplies. This explains why it had been promoting the South Stream project as an alternative to Nabucco, persuading the Balkan and Central European countries to opt for it. It may also mean that Turkmenistan is moving away from Russia and getting closer to the US, which could transform the Caspian energy sweepstakes.

With Russian gas supplies dwindling and surplus for export shrinking, Gazprom is even more dependent on Turkmenistan which currently produces 80,000mmcfd annually out of which most is sold to Russia. However, in recent months, supplies to Russia have been cut back sharply, because of an explosion on the Soviet-era Central Asia-Centre pipeline.

In the meanwhile, Turkmenistan has also agreed to increase its contracted gas supplies to China via a pipeline nearing completion. In addition, Turkmenistan has agreed to step up gas supplies for the Nabucco pipeline, which means that Turkmenistan intends to reduce its dependence on Russia. This could encourage other Central Asian energy producers to move away from Russia and opt for European markets through pipelines not going through Russian territory.

This means that Turkey is fast becoming the ideal transit country to carry non-Russian gas from Egypt, Iraq, Iran, Turkmenistan, Azerbaijan and Kazakhstan to Europe, thereby assuming the role of an energy hub for Europe. But Turkey is careful not to antagonise Russia, a neighbour, top trading partner and main gas supplier.

Turkey is already linked directly to Russia through the Blue Stream gas pipeline, which runs under the Black Sea. Hoping to attract Russia and Kazakh oil, Ankara is promoting a pipeline from its Black Sea port of Samsun to Ceyhan on the Mediterranean coast, which already serves us a terminal for conduits pumping oil from Azerbaijan via Iraq.
While the world’s powerful states are scrambling to acquire secure sources of energy, we have failed to move on even one pipeline project, which only shows how oblivious our leadership has been to the country’s increasingly desperate need for energy.