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Home > Blogs > Anthony Harrington > Why geopolitics creates havoc with South Asia’s energy needs. Part 2

Why geopolitics creates havoc with South Asia’s energy needs. Part 2

IPI pipeline | Why geopolitics creates havoc with South Asia's energy needs. Part 2 Anthony Harrington

Despite the challenges looked at in Part 1 (which you can read here), the potential of an IPI (Iran-Pakistan-India) “peace” pipeline has long generated considerable comment and attention from neighboring countries. Writing in the March 5, 2010 edition of the US-based conservative think tank, the Jamestown Foundation’s China Brief, Stephen Blank points out that back in April 2007 Gazprom and the Russian government indicated an interest in the possibility of Russia sending oil and gas to the sub-continent through a completed IPI pipeline. There is also the (not yet quite dead) prospect of some interest from China.

Creating the IPI

According to Blank, in 2007 Gazprom’s man in Tehran, Abubakir Shomuzov “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.” One can only imagine how much such a project would disturb US policy makers. For its part, however, the Pakistan side has long been enthusiastic about the possibility of Chinese participation. In 2008, China gave a cautiously approving response to continued courting by former Pakistani President General Pervez Musharraf, who also proposed establishing a corridor linking Pakistan to China through rail, road and fibre optics. According to Blank, China promised to consider the proposal, asked for more information, and, as far as anyone knows, in May 2011, is still considering the proposal.

The Indian side, however, is not. Or, at least, not for now. The official reason for India finally deciding to walk away from participation in the peace pipeline is not so much US pressure, or so the story goes, as Iranian negotiating cack-handedness. Successive Indian delegations got fed up with the Iranians constantly reopening matters, particularly matters pertaining to pricing, that had been resolved at earlier meetings. It is likely though, that US pressure, combined with enthusiastic US support for a viable alternative source of additional gas for India, from Turkmenistan, via Afghanistan and Pakistan, played a very significant role in getting the IPI “peace pipeline” shelved by the Indian side.

However, India’s on-again, off-again role in the IPI has been a perennial feature of the project since its inception. In 2007 it was widely reported that India had withdrawn from the project, with the possibility of a Turkmenistan pipeline being cited even then as a possible replacement. India and Iran also did considerable work on an alternative project which would have linked the two countries via an undersea pipeline, by-passing Pakistan altogether.

As recently as December 2010, however, Pakistan Today was reporting “a senior diplomat attached to the Permanent Mission of India to the UN” as stating that India has “not abandoned the $7.3 billion IPI project and is seriously looking for courageous insurance companies to underwrite it.”

Meanwhile, the IPI pipeline, now reduced to the IP pipeline, is slowly taking shape. In April a report in the regional newspaper, Dawn, cited the Pakistan Federal Minister for Water and Power, Syed Naveed Qamar’s statement to the Pakistan National Assembly that the IP project would "hopefully be completed by December 2015" for first gas through the pipeline, with no third country participant currently even in the wings.

In February Iran announced that 90% of the work on the IP was completed on its side of the border. Iran’s Abassador to India, Seyed Mahdi Nabizadeh said that work was also going forward on the Pakistan side. “We have allocated 50% (of the IP capacity) to Pakistan, and any other country, including India, can join and get the balance (of the gas),” he was quoted as saying in an article in the India Times.

Wikileaks in the IP pipeline

Against these hopeful signs one has to set the Wikileaks revelation of a cable from one US source to Washington stating that the IP project was highly unlikely to progress “because Pakistan had no money to pay for either its share of the pipeline’s construction or for the gas once it starts to flow.” How, exactly, Pakistan is going to pay for the project is unclear. The country has budgetary issues across a wide range of fronts, but what is certain is that it needs more energy resource and the IP project is one of its best shots at getting access to additional supplies.

Once (if) the pipeline is in place, and if Pakistan proves able to secure it from terrorist attacks – doubtful in the light of numerous recent successful attacks inside Pakistan on existing internal gas pipeline infrastructure – and if Iran proves to be a reliable supplier to Pakistan, then India may well be tempted to rejoin once again. There is nothing to prevent the India-Pakistan leg from being a late bolt on, provided any surplus gas through the pipeline has not already been claimed by some other third party, China, for instance.

What is certain is that the focus of attention, as far as India is concerned, has now switched to the proposed $7.3 billion TAPI pipeline, involving the governments of Turkmenistan, Afghanistan, Pakistan and India. That pipeline too has its geopolitical dimension, which is no small thing. But that should be viewed in the context of a different blog about Europe’s attempts to diversify away from Russian gas. One for the future.

Further reading on economic growth in Asia:

Also read 'Why geopolitics creates havoc with South Asia's energy needs. Part 1'.

Tags: China , India , IP , IPI , Iran , Pakistan , peace pipeline , South Asia , TAPI , Turkmenistan
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