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An assessment of international oil & gas pipelines

Oil & gas pipelines are a bad idea for India in the north-west sector but can be contemplated in the eastern sector with Bangladesh and Myanmar.

by Piyush Singh (@PiyushS7)

The nuclear deal between Iran and the world powers is being heralded as new era in diplomacy, creating a new player in the international energy supply scene. India too, does not want to be left behind and is slowly signing up with various projects in the region, including development of the long delayed Chabahar port.

Prime Minister Modi in his recent visit to Kazakhstan and Turkmenistan has again floated the idea of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and another one from Kazakhstan. India is also in talks with Russia to extend their gas pipelines through Central Asia and China to India. With the nuclear deal done, Iran-Pakistan-India (IPI) pipeline proposal is again gaining steam. India had reportedly backed off the collaboration in 2009 under extreme US pressure.

These initiatives are counter-productive from a security point of view — they are akin to giving one’s adversary the trigger to hold you at ransom at will. Pakistan and/or its non-state agents will regularly create problems of transit on their side of the border.

Brief History of IPI

The IPI as an idea was first conceptualised in the 1990’s to meet India and Pakistan’s growing energy demands and to further regional cooperation. Iran has the largest reserves of natural gas in the world at around 33.8 trillion cubic meters, and is continuously looking to export some of these to develop their nascent industries. US led sanctions on Iran’s nuclear program halted progress on this, and Pakistan was also forced to back off under Saudi pressure.

However, in 2010, Pakistan and Iran signed a deal again to restart the project and Iran completed its share of construction of the pipeline within its borders by 2013. Iran also pressurised Pakistan to complete the construction on its side, failing which there will be a penalty of 1million dollars per day, if its not completed by the end of 2014. China during the same period showed interest in the project and agreed to finance 85% of the construction and infrastructure on the Pakistani side.

Af-Pak Factor
Pakistan and Afghanistan are geographically situated to utilise such natural resources and to reduce their huge energy deficits, but for one factor-insurgency and terrorism. Both these countries carry a huge political and economic cost for anyone looking to invest in them.

The proposed IPI and TAPI run through the most volatile regions of Afghanistan and Pakistan, and as such securing regular supply will become a headache for India if the project were to materialise.

Looking at the European example, Russia regularly cut-off gas supply to Ukraine on account of failure of payment by Ukraine, because of which much of the Eastern and Central Europe suffered. It is highly likely that Pakistan, as an intermediary cannot be trusted with such a project, disturbance of which will carry huge economic implications.

Alternatives
Myanmar-Bangladesh-India pipeline is a possible alternative to meet India’s energy shortages. Considering the recent upswing in relations between India and Bangladesh and India-Myanmar, it is a good time to pursue these energy deals. Myanmar has gas reserves of 20 trillion cubic feet, enough to satisfy India’s energy shortfall in the eastern sector. Both India and Bangladesh are energy starved, and Myanmar is looking to diversify its market apart from China, which recently started transferring natural gas from Myanmar.

Another alternative to the IPI is taking the sea route. Though much more costlier and technologically challenging than the land pipeline, it removes the perils of traversing through the most volatile sectors of the region in Af-Pak.

In the same way, Turkmenistan-Iran-India (TII) pipeline could replace TAPI.

However, India needs to move quickly on these fronts, as Iran will be courting a lot of customers to diversify its market. And China will be up with all its top dollars to carve a chunk out of it. It is already moving ahead with financing the Iran-Pakistan pipeline, with possibility of extension into China through the Gilgit-Baltistan region. It is imperative that India look at securing its energy sources, and move swiftly to meet and diversify its energy sources.

Piyush Singh is a Junior Research Associate with the Takshashila Institution. He is pursuing a law course at the Hidayatullah National Law University, Raipur. He is on twitter as @PiyushS7

 

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