Iran-Pakistan pipeline inches nearer reality
By Syed Fazl-e-Haider
KARACHI - Islamabad and Tehran have signed an operational agreement on the
Iran-Pakistan (IP) gas pipeline project, a month after the signing was delayed
because Pakistan was unable to arrange funds for the project.
The countries signed a "heads of agreement" and certain "condition precedents"
to make the gas sales purchase agreement (GSPA) signed last June effective. The
signing of these agreements was required for the flow of Iranian gas towards
Pakistan to begin in three to four years.
The pipeline as initially mooted was to carry gas from Iran to Pakistan and on
to India. India withdrew from negotiations last
year over disagreements on price and transit fees, but it is still open for the
country to joint the agreement.
The United States, Pakistan's largest aid donor, is reluctant to help Islamabad
proceed with the multi-billion dollar pipeline because of the participation of
Iran, perceived in Washington as seeking to build nuclear weapons. Some
analysts believe that financial sanctions on Iran may delay but not force the
cancellation of the pipeline, as China is also keen to join the project.
Beijing may provide financial assistance to Islamabad to get the project
started.
Under the GSPA, Iran will provide 750 million cubic feet of gas per day to
Pakistan for the next 25 years. Initially, an offshore pipeline was proposed,
but the present plan is for an overland route from the South Pars fields in
southern Iran.
Pakistani President Asif Ali Zardari and his Iranian counterpart, Mahmoud
Ahmadinejad, signed a US$7.5 billion agreement in Tehran last May, finalizing
the deal to transfer gas from Iran to Pakistan. Iran will initially send 30
million cubic meters of gas per day to Pakistan, to be increased to 60 million
cubic meters per day.
Each country will be responsible for building the section of pipeline that runs
through its own territory. The Pakistan government had been unable to allocate
proper financing and the US is not willing to give financial assistance in this
regard, DawnNews reported, citing sources from Pakistan's Ministry of Petroleum
and Natural Resources.
The US has previously pledged all-out support in ensuring energy security for
Pakistan, which suffers long and frequent blackouts amid an electricity
shortfall of more than 3,000 megawatts. US companies, such as Carlyle Group
affiliate 4Gas, Oklahoma-based Walters Co, and Global Edison, plan various
energy-related projects in the country.
Critics say that the US interest in resolving Pakistan's energy crisis is an
attempt to foil the Iran pipeline project.
Beijing is interested in building a pipeline from Iran via Pakistan into China
to secure an overland energy corridor less liable to interruption by US or
other forces at times of international tension while also cutting out the
20,000 kilometer tanker route around the southern rim of Asia. Critics say that
by opposing the IP project, the US is also trying remove this option for China.
China at present appears to be the sole country holding out against sanctions
against Iran over its nuclear policy of the five veto-wielding members of the
UN Security Council (the others are United States, Russia, Britain and France).
The need for Iranian oil and gas is making it difficult for Beijing to agree
with Washington on its stance against Tehran, according to a report in Dawn
last month. Approving sanctions against Iran would mean the loss of 10% to 12%
of China's oil imports and of hundreds of billions of dollars worth of oil
locked into futures contracts, while also ending about $80 billion in
Beijing-backed development projects in Iran. If China joins the project, the
pipeline would pass through Pakistan's Northern Areas, now known as
Gilgit-Baltistan, and into China via the Khunjerab Pass. The pipeline would
roughly parallel strategic transport links China is developing between its
remote western regions, including Xinjiang, and Gilgit-Baltistan.
Syed Fazl-e-Haider (www.syedfazlehaider.com) is a development analyst in
Pakistan. He is the author of many books, including The Economic
Development of Balochistan (2004). He can be contacted at sfazlehaider05@yahoo.com
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