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India, Pakistan dig in over
pipeline
By Siddharth
Srivastava
NEW DELHI - Despite US
reservations on the issue and the threat of
sanctions, India and Pakistan are pushing ahead
with their plans for a 1,600-mile
Iran-Pakistan-India gas pipeline. In another
indication that India, and more curiously,
Pakistan will stick to the agenda, a two-day
meeting of a joint working group of the two
countries that ended this Wednesday has set a
timetable for the pipeline.
The US
recently warned its traditional ally Pakistan of
sanctions if it went ahead with the project.
Washington would rather see the South Asian
countries obtain resources from countries closer
to its sphere of interest, and isolate Iran, which
it suspects of developing nuclear weapons. The US
has issued similar warnings to India. Both Delhi
and Islamabad have been trying to persuade the US
to change its mind, without success.
Reacting to US reservations, Pakistan Oil
Secretary Ahmed Waqar, who was in New Delhi, said,
"Our president and prime minister have stated on a
number of occasions that we would take a decision
on what our public interest would demand."
Waqar said Pakistan would start
experiencing a shortage of gas by 2010, thus it
wants to ensure that the "proposed" pipeline takes
off much before that . "The ADB [Asian Development
Bank] has stated that an Iran-Pakistan pipeline is
feasible, but the economics improve if India
joins," he added.
As a major step toward
fructifying the US$8 billion (the estimate revised
from the earlier $4 billion figure) pipeline
project, both countries have decided to appoint
financial consultants by September 15. Indian
Petroleum Secretary S C Tripathi said the two
sides had broad agreement on the composition of
the gas, technical standards and techno-economic
considerations that will make the project
cost-effective for both countries.
The
consultants will submit their report by the end of
November, when Petroleum Minister Mani Shankar
Aiyer will travel to Pakistan to ink an agreement
on the project. The two countries want it to get
off the ground by early 2006 - it will take five
years to construct. Last month, Aiyer met his
Pakistani counterpart Amanullah Jadoon and Iranian
Oil Minister Bijan Namdar Zanganeh, following
which the US made its displeasure on the project
more apparent.
By inking such a detailed
agreement against US wishes, India and Pakistan
have signaled what experts have been talking about
for a while, that the geopolitics of South Asia
vis-a-vis the US, which were about wheat in the
1960s and 1970s and the movement of intellectuals
in the 1990s, are now about controlling the
transportation and consumption of energy, more
specifically natural gas.
While the US
stresses the threat to global security of Iran's
supposed nuclear weapons program, buttressed in
some way by the defeat of liberal voices in the
recent Iranian presidential elections, the real
story, as well as conflict of interest, lies
elsewhere.
It's a gas
A global
oil crisis is brewing with India, China and US
identified as the future powerhouses guzzling more
oil than they can possibly produce or import. Oil
prices have sky-rocketed to over $60 a barrel,
with petrol and diesel prices undergoing frequent
rounds of increases across Asia. The rise in
prices, however, is expected to reduce demand only
in the short term.
It is estimated that by
2025, today's global demand for 84 billion barrels
of oil per day will have grown to 121-130 billion
barrels a day. The US is the world's largest
energy consumer. US demand for oil is about 21
million barrels per day, compared with 7.4 million
barrels projected this year for China, according
to the US Energy Department. India's oil
consumption was 2.2 million barrels in 2003 and is
projected to grow to 2.8 million by 2010,
according to the department. No amount of digging
domestic resources in Alaska will yield the US
requirements. US Energy Secretary Sam Bodman said
recently that it would take years to close the gap
between increasing world oil consumption and the
ability of oil producers to meet that demand.
It is in this context that natural gas has
emerged as a more environmentally sound, cheaper
and easily available substitute to oil. Compared
to oil at over $50-55 a barrel, an equivalent
amount of gas costs only in the region of $20.
Experts predict that gas, which was once
considered a wasteful by-product of oil
exploration, will turn into the number one fossil
fuel.
The problem, however, is that the
US, India and China, more specifically the first
two, as well as Japan and the European Union
countries, are all situated at some distance from
major reserves of gas in countries such as Iran,
Qatar, Yemen, Russia, Central Asia, Nigeria,
Angola and Venezuela. Then there is the added
problem of these nations facing unstable political
situations. Gas will have to be carried through
disturbed and often dangerous physical and
political regions.
China and India want to
quickly tie up with these gas-producing countries,
with the US trying to balance growing Asian demand
with its own rising requirements. India has
already signed a $22-billion deal to buy liquefied
natural gas, or LNG, from Iran over a period of 25
years starting in 2009, after protracted
negotiations. India recently signed a LNG deal
with Qatar to tide over its energy shortages.
Over the past month, scores of Indian
officials, including the deputy chairman of the
Planning Commission and, curiously, India's
national security advisor, have been involved in
conveying India's position to the US. This
includes ending the linkage of Iran's nuclear
program with needs of energy security. But the US
has been playing tough. Indian Prime Minister
Manmohan Singh travels to the US in a few days to
meet President George W Bush. This issue will
certainly be on the agenda.
Bush recently
said that the US would encourage China and India
to turn into more efficient users of oil. "It's in
our economic interest and our national interest to
help countries like India and China become more
efficient users of oil. That would help take the
pressure off global oil supply, take the pressure
off prices here at home," he said. But such
diplomatic tones will likely disappear when
nations across the world fight over gas.
One immediate casualty could be the US
firmly shutting the door on any hopes that India
had of becoming a part of the UN Security Council.
Even as India and Pakistan discussed the pipeline,
US representative Shirin Tahir-Kheli told the UN
General Assembly that the Bush administration did
not think any proposal, including its own formula
to expand the Security Council, should be voted
"at this stage". It may be recalled that
Washington recently sent signals to India that it
might support Delhi's bid.
Siddharth
Srivastava is a New Delhi-based journalist.
(Copyright 2005 Asia Times Online Ltd.
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