NEW DELHI - With the Iran-Pakistan-India
(IPI) gas pipeline caught in the US crossfire over
Iran, India's quest for energy security continues
in other fronts, with progress being made in the
proposed Myanmar-Bangladesh-India (MBI) gas
pipeline project.
As US interests in these
regions is low at the moment, India has been
talking in earnest with the two nations to iron
out differences on the project. Some analysts
predict an early breakthrough, with the project
possibly moving onto the implementation stage
quicker than expected.
India's zealous
Petroleum Minister Mani Shankar Aiyer has been
shuttling between Iran, Bangladesh, Pakistan,
Myanmar and Central Asian countries. Earlier this
month, a fractured leg did not prevent Aiyer from
proceeding to Dhaka from London (where he was on a
visit) for talks on MBI. Aiyer said there has been positive
development on the US$1
billion tri-nation pipeline project. "My
impression is that things are moving forward," he
said after a one-hour meeting with Bangladesh
Foreign Minister M Morshed Khan.
With the
IPI in a logjam, deepened by India voting for the
possible UN Security Council referral of Iran at
the International Atomic Energy Agency meeting at
Vienna, Prime Minister Manmohan Singh is believed
to have prodded Aiyer as well as Foreign Minister
Natwar Singh on the MBI.
The high-level
meeting with the prime minister cleared Aiyer's
visit to Dhaka for talks to thrash out the details
of a trilateral memorandum of understanding with
Bangladesh and Myanmar that has been delayed over
inclusion of bilateral issues, which India feels
should be dealt with independently.
Though
Bangladesh stands to earn substantial transit fees
of $125 million per year, it has set conditions
that include creation of corridors through India
to carry out trade with other neighbors such as
Nepal and Bhutan as well as steps to reduce its
$2.5 billion trade deficit with India.
In
January, India had reached an agreement in
principle with Myanmar and Bangladesh on the
pipeline that will bring natural gas from
Myanmar's Shwe gas fields to India via Bangladesh.
Under the agreement, Dhaka can decide whether to
supply its own gas into the Myanmar pipeline
without any fear of depending too much on its
giant neighbor, India.
Apart from energy
security for India, the deal can improve relations
between India and Bangladesh, which have dipped
sharply in the last few years due to India's
suspicions that Dhaka is ignoring the rise of
Islamic extremism and militancy.
Aiyer had
said in January: "When you look at a map you may
accuse me of dreaming, but as a minister I am paid
to dream. We have the Bangladesh-Burma [Myanmar]
pipeline, we are looking at a pipeline from Iran
that would cross Pakistan, and we want a pipeline
from Turkmenistan that would cross Afghanistan and
Pakistan."
India has been trying hard to
push the Turkmenistan-Pakistan-Afghanistan
pipeline. During his visit to Kabul in August,
Manmohan said India would prefer to have gas
pipelines from both Iran and Turkmenistan.
Analysts are, however, skeptical about the natural
exportable gas reserves from Turkmenistan.
Aiyer's latest visit to Dhaka assumes
significance as New Delhi and Yangon have begun
exploring alternatives for importing gas from
offshore Myanmar due to failure of progress with
Bangladesh. Aiyer has talked of the possibility of
constructing the pipeline from Myanmar into
Mizoram and onwards to Assam (both in northeast
India) and culminating in West Bengal, a total
distance of 1,400 kilometers.
This route
is approximately twice the length the pipeline
would travel if it were to pass through
Bangladesh. As a further hardening of its stance,
Bangladesh was not invited to the third meeting on
the project in New Delhi. However, given the
economic advantages as well as higher feasibility,
India opened another window for negotiations with
Bangladesh. Foreign Minister Natwar Singh visited
Dhaka in August and said the tri-nation project
would not proceed without Bangladesh's
involvement.
Some analysts see India's
renewed vigor in MBI due to a possible delay in
the IPI project because of US reservations about
Iran's nuclear program. With India siding with the
US and Europe at the IAEA, it is now apparent that
New Delhi does not want to jeopardize its growing
relations with the US. In early June, Aiyer made a
10-day trip to Uzbekistan, Pakistan, and Iran to
secure long-term oil and gas contracts for
energy-starved India. He struck deals everywhere,
but caught the attention of US when he arrived in
Tehran to announce that India was ready to proceed
with the $7 billion IPI gas pipeline. The US at
once denounced the project.
As was
apparent during Manmohan's recent four-day visit
to New York for the UN General Assembly meetings,
the US will make it difficult for India to pursue
the IPI, with Pakistan also indicating that it
might withdraw from the project if the US meets
some of its strategic demands. There is thus
immense political pressure on New Delhi to show
results on the energy front.
India is
happy that Dhaka seems to have turned a new leaf,
given the economic benefits that can flow and the
pressure from India and Myanmar. Briefing newsmen
after the talks with Aiyer, Bangladeshi energy
advisor Mahmudur Rahman said: "The Indian minister
visited Dhaka to understand our stand on the
pipeline issue and we tried to let India
understand that economic development of Bangladesh
would also benefit India." He said Aiyer did not
have any objection in principle against Dhaka's
conditions but thought that those should not be
tagged with the pipeline issue.
India's
quest for energy sources is also rooted in the
huge supply gaps that need to be plugged. India
imports nearly 70% of its energy needs, with
estimates suggesting that by 2020 the country will
be importing 85% of its energy requirements. India
has to tap into international resources for crude
oil or natural gas.
India produces about
90 million standard cubic meters of natural gas
per day as against its daily demand of 120 million
standard cubic meters that is likely to go further
in the coming years. The projected demand of
natural gas in India by 2020 stands at a huge 400
million standard cubic meters a day which cannot
be met domestically.
In the past few
years, India's public sector oil companies such as
the Oil and Natural Gas Commission and Oil India
have made successful bids in oil exploration and
production deals in Libya, Iran and Central Asia.
Experts say the switch to natural gas and the
construction of the three pipelines provides three
huge resources of energy from three different
directions. This will give India a jump of 20
years to implement other alternative energy like
hydrogen fuel.
In an interview, Aiyer
said: "Our primary focus is now to convert these
in-principle [pipeline] deals into firm
techno-commercial agreements. If these can become
a reality, it would herald a new beginning in the
Asian oil economy ... If these pipelines can bring
together countries that have been separated from
each other, we can build the biggest geopolitical
pact of the 21st century."
Siddharth
Srivastava is a New Delhi-based journalist.
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