Introduction
Energy security, being the principal driving factor behind the economic development of any state, has been remained the most contested field among states in post- industrial world. Energy, on the one hand, is essential for running the machinery of industrial and agricultural units, lighting up the cities, while on the other hand it is required for the domestic use by the citizens. Because of the unprecedented industrialization during the last two decades, surge in population,changing lifestyles, greater transportation needs; and lack of proactive and integrated planning for production of energy, Pakistan is currently facing acute energy crisis.
Today Pakistan is fulfilling its energy needs through the consumption of gas, oil, and coal. Among these, natural gas is the primary energy source, accounting for 43.7 percent in total energy consumption of Pakistan. Due to decades long neglect, mismanagement and lack of investment in energy development sector, the intermittent gas and electricity outages is order of the day in recent years. And which is in return crippling daily life across the country and leading towards the closure of hundreds of industrial units, leaving millions of people, directly or indirectly attached to the textile manufacturing trade, unemployed.
In recent years the gap between supply and demand of gas has reached nearly one billion cubic feet per day (BCFD) mark. According to the petroleum ministry estimates, natural gas shortfall against committed supplies remained around 911 million cubic feet per day (MCFD) in December, 1.1 MCFD in January 2012 and will swell to 1.4 MCFD in February before easing down to 726 MCFD in March. And unfortunately the forecasts suggest that the problem is likely to worsen in coming years. According to official estimates, gas shortfalls are estimated to reach 2.5 BCFD in 2014-15, 3 BCFD in 2015-16 and 3.5 BCFD in 2016-17. Thus the gap is likely to shoot up to 5 BCFD in 2020-21, unless major gas discoveries and field developments are made.[i]
Energy shortage, particularly due to the scarcity of gas, has become an importunate menace for Pakistan. To overcome the acute energy shortage the relevant authorities had been, and are still, struggling to find a viable solution. Two major gas pipeline projects had been there on the cards since early 1990s. One is Turkmenistan, Afghanistan, Pakistan, India (TAPI), a $7.6 billion gas pipeline project, stretching over 1680 kilometers (km) from Turkmenistan gas fields to Afghanistan, Pakistan and ending at the Indian town of Fazilka. While the other one is Iran-Pakistan (IP) gas pipeline, bringing 21.5 million cubic meters of the Iranian natural gas, per day to Pakistan covering a distance of 2100 km.
Pakistan, since 1990s has been trying to realize the TAPI and IP gas pipeline projects but these attempts remain hostage to continued American objections to Pak-Iran cooperation as well as to the political insecurity and the resultant instability in Afghanistan and Balochistan (Pakistan).
TAPI
The proposed 1,680 km long multi-billion TAPI gas pipeline will bring 3.2 billion cubic feet of natural gas per day (BCFD) from Turkmenistan gas fields to Afghanistan, Pakistan and India.The 56 inch diameter TAPI pipeline is estimated to carry 27 billion cubic meters (BCM) of Turkmen natural gas per year; however the pipeline carrying capacity will be enhanced to 33 BCM eventually. Under the agreement, TAPI gas pipeline will deliver 27 BCM of natural gas per year, where Afghanistan will avail 2 BCM, while Pakistan and India will fetch 12.5 BCM gas each.
According to initial plans TAPI gas pipeline will originate at the Daulatabad Field in Turkmenistan, pass through Kandahar and in Afghanistan, and then meander through Pakistani towns of Chaman, Zhob, Dera Ghazi Khan, and Multan, before converging on the northwestern Indian town of Fazilka. The initial cost announced for this mega project was $3.3 billion, however because of the delay in the settlements of pricing issues, and the fragile law and order situation in the pipeline transit routes, the project cost is now being forecast at $7.6 billion.
The agreement for this project was signed in May 2002 in Islamabad. In April 2008, India joined the project and it was renamed as Turkmenistan, Afghanistan, Pakistan, India (TAPI) gas pipeline.
IP
The Iran-Pakistan (IP) gas pipeline project costing $1.25 billion[ii] is considered crucial for addressing the worsening energy crisis, confronting Pakistan. Iran has the second-largest gas reserves in the world and aims to export 8.7 billion cubic meters per year[iii] of the Iranian natural gas to Pakistan under the multi-billion-dollar Iran-Pakistan gas pipeline project. Maximum daily gas transfer capacity of the 56-inch pipeline has been given at 110 million cubic meters[iv]. Iran has completedthe construction of 900 km out of the 1100 km of the pipeline on Iranian soil at a cost of $700 million, while Pakistan share of the approximately 1000 km is yet to be built.
A daily amount of 21.5 million cubic meters of Iranian natural gas will be supplied from the Iran South Pars fields to Pakistan, under the agreement. The initial capacity of the pipeline is expected to be 22 billion cubic meters of natural gas per year, which is likely to be raised later to 55 billion cubic meters.[v] The project will be funded through public-private partnership and will benefit Pakistan immensely. The pipeline is expected to deliver 21.5 million cubic feet of natural gas to Pakistan daily, with power generation capacity projected at 5,000 megawatts ´ roughly equivalent to Pakistan recent energy shortfall.
Initially, this project also included India and was termed as Iran-Pakistan-India (IPI) pipeline project. The 2700 km pipeline was to originate from Iran South Pars fields in the Persian Gulf, going through Karachi and Multan in Pakistan, and finally to Delhi, India, but India withdrew from the project in 2009 on the pretext of insecurity and high gas pricing concerns. However it was widely believed that following a civilian nuclear deal with the US and the ensuing American pressure prompted India to withdraw from the deal. Apparently, the US administration succeeded in preventing India from becoming part of the IP Project. It also attempted to dissuade Pakistan from the project, yet the energy-starved Islamabad stood its ground and continues to stick to it despite new American sanctions against Iran.
US Sanctions against Iran
In the most recent episode of Washington ‘sanction series’ against Iran, President Barack Obama slapped a fresh set of sanctions on the Iranian government, including the Central Bank, to pressurize Tehran to end its nuclear programme. According to a statement from the White House “Among other things, the executive order freezes all property of the Central Bank of Iran and all other Iranian financial institutions, as well as all property of the Government of Iran, further tightening the already broad-based and stringent U.S. sanctions on Iran.’[vi]. Furthermore the U.S. treasury department, responsible for enforcing sanctions, said in a statement that “Iran now faces an unprecedented level of pressure” and that the new sanctions confirms Iran “will face ever-increasing economic and diplomatic pressure until it addresses the international community’s well-founded and well-documented concerns regarding the nature of its nuclear program.”[vii]
The current regime of international sanctions against Iran spearheaded by US is aimed at biting Iran economy by pushing up inflation and further eroding its currency. United States wishes to avert any possible sources of revenue for the Iranian nation, as US-led economic sanctions on its oil exports, a major source of revenue for Iran’s government, have already dealt a hard blow to Iran economy. European Union has already approved an embargo on Iranian oil that is going to take effect in July. Meanwhile according to sources top U.S. officials recently met with Japanese and Chinese leaders, to persuade them to cut off Iranian crude oil imports.
At the moment the United States not only tightens the screws on Iran, but also continues its pressure tactics to keep Pakistan
away from its gas pipeline venture with Iran as well. The US has repeatedly illustrated its opposition to the project and also communicated to Islamabad that this project would come under the ambit of US sanctions. But along with pressing hard to prevent it from partnership with Iran in the pipeline deal, Washington is also trying to induce Pakistan, in the form of an offer to help it secure cheaper gas from multinational US companies. Besides persuading Islamabad to stop purchasing liquefied natural gas from Tehran, the United Stated has also offered to finance the multi-billion dollars TAPI gas pipeline in order to lure Islamabad away from the IP gas pipeline deal. The offer was made by the US ambassador to Pakistan Cameron Munter during a meeting with Finance Minister Dr Hafeez Shaikh in recent months.[viii]
Actually, it would have never bothered Washington had it not been for its current obsession to isolate Iran and inflict as much pain as possible on the mullahs in Tehran to force them to forego their nuclear programme. The Americans very well know the problems Pakistan is facing due to aggravating energy crisis. Even a dunderhead would wonder why it didn–t occur to them to help us overcome the shortages before we eventually finalized the pipeline deal with Iran.[ix]
Meanwhile, Washington opposition to the IP project is not a new phenomenon. Whenever Pakistan makes a move for securing more energy, the Americans move to oppose, if not obstruct, it. Although the IP project promises four times cheaper energy, in comparison to TAPI pipeline project, yet the Obama administration wants Pakistan to pursue TAPI as the preferred option.
Pakistani authorities, however, have decided to press ahead with the project. The foreign office clarified that Pakistanis committed to the Pak-Iran gas pipeline and the sanctions imposed onIran by the United States,do not affect the project. ‘Both countries are engaged with each other and there is no concept of disengagement’ and ‘there is no change in our stance and we are working to complete the project by 2014. We believe that this project is beyond the scope of the relevant UN resolutions which we are obliged to comply with like all other member states’ said foreign office spokesman Abdul Basit on January 27, 2012, while replying to a question related to the IP gas pipeline.[x]
Against the backdrop of Pakistani stance on IP project, and rapid progress, especially on Iranian side of the border in laying the pipeline, US is trying relentlessly to sabotage the deal. President Asif Ali Zardari underlined on Tuesday, February 7, 2012 that Pakistan is committed to the rapid execution of the Iran-Pakistan gas pipeline project so as to address the country crippling energy crisis.[xi]
The IP gas pipeline project sounds like an ideal deal for the energy-starved country, but US opposition to the project is the key hurdle in the accomplishment of the project. As an alternate to IP, the US has been peddling Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. The TAPI project is an effort to bypass the US adversary Iran for supplying gas from Turkmenistan via Afghanistan to Pakistan and India. But ongoing insurgency in Afghanistan is the major stumbling block impeding the progress on this project. The fact that the project will have to cross not one, but two nations suffering from armed insurrection, Afghanistan and Pakistan, makes the foreseeable future of the project hazardous and risky. To invest billions of dollars in the TAPI pipeline, which is planned to pass through Herat, Helmand and Kandahar ´ all sites of major Taliban activity in Afghanistan ´ is fraught with risks.
While going for the cost benefit analysis, the IP project is certainly a more feasible and low cost option for Pakistan as compared to TAPI. The cost of IP gas pipeline construction project is $1.25 billion, which is four times cheaper than trans-Afghan TAPI project of $7.6 billion. Furthermore, securing the infrastructure on the pipeline route of IP is much easier than securing TAPI pipeline that will pass through the war-torn Afghanistan and insurgency-hit Balochistan province of Pakistan. Another important factor is that more than 90 percent construction work is already completed on the Iranian side, while Pakistan has yet to start the infrastructure development on its side. The infrastructural development in the case of TAPI pipeline has yet to begin.
Future Prospects
At the moment Islamabad is under immense diplomatic pressure from Washington to abandon the pipeline project altogether, while Pakistan appears determined to pursue it. By declaring IP a hypothetical and bad deal, the US clearly wants Pakistan to abandon its cooperation with Iran, without offering much in real substance. In retrospect, one finds that US is always around Pakistan as long as its interests are at stake. But once those interests are served, the administrations in Washington tends to turn its back on Islamabad, stating its own domestic political handicaps, or limitations in the face of the Congress. That is why, In Washington, even Pakistan pressing energy requirements hardly matter when it comes to its antagonism with Tehran. If Washington were to remove its objections and opposition to the Pak-Iran gas pipeline, this could be seen as a huge confidence-building measure (CBM) in Pakistan. But sofar, there are no signs of the United States relenting its pressure. That is why most of Pakistani officials as well as non-governmental commentators insist that even if Washington fails in demonstrating this CBM, Pakistan must forge ahead with the proposed pipeline from Iran to augment its strained energy supply.
Contributed by Ayesha Bint-e-Rafique, Rresearch Assistant at CRSS
[i] Farakh Shahzad, Gas crisis generating unemployment, Pakistan Today, 30 December, 2011, http://www.pakistantoday.com.pk/2011/12/gas-crisis-generating-unemployment/
[ii] http://www.dailytimes.com.pk/default.asp?page=2011%5C11%5C14%5Cstory_14-11-2011_pg7_7
[iii] http://www.presstv.ir/detail/224175.html
[iv] http://www.presstv.ir/detail/225592.html
[v] http://www.saglobalaffairs.com/cover-stories/1110-standing-strong.html
[vi] ‘Deceptive practices’: US levies new sanctions on Ira, msnbc.com, http://worldnews.msnbc.msn.com/_news/2012/02/06/10331492-deceptive-practices-us-levies-new-sanctions-on-iran
[vii] Tennille Tracy, U.S. Toughens Sanctions on Iran’s Central Bank, The Wall Street Journal, February 7, 2012 http://online.wsj.com/article/SB10001424052970204369404577206973883832002.html
[viii] Zafar Bhutta, Wielding soft power: US offers to finance TAPI gas pipeline, The Express Tribune,
http://tribune.com.pk/story/308650/wielding-soft-power-us-offers-to-finance-tapi-gas-pipeline/
[ix] Zafar Hilaly, Supporting Iran, The News, February 1,2012 http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=90603&Cat=9&dt=2/1/2012
[x] Pakistan says resolute to complete IP gas pipeline despite US pressure, February 9, 1012, http://www.ecasb.com/newsdetail-9433-en.html
[xi] Pakistan committed to gas pipeline project, Zardari tells Iranian VP, Pakistan Today, 8 Feb 2012, http://www.pakistantoday.com.pk/2012/02/pakistan-committed-to-gas-pipeline-project-zardari-tells-iranian-vp/