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    South Asia
     Feb 19, 2011

Iran gas pipeline to Pakistan on hold
By Robert M Cutler

MONTREAL - The bilateral Iran-Pakistan gas pipeline project is now officially suspended, as the IRIB (Islamic Republic of Iran Broadcasting) website on Sunday quoted Ali Reza Gharibi, the Iran Gas Engineering and Development Company's managing director, as saying that "construction of the ... gas pipeline for export of natural gas from Iran to Pakistan will continue as of next spring", without giving a reason for the suspension.

Events, or their absence, have confirmed the skepticism that in some quarters met rumors of the deal even before the signature of the inter-governmental agreement last May on the basis of an


understanding on pricing reached two months earlier. (See Iran-Pakistan pipeline not a done deal, Asia Times Online, June 26, 2009.)

Readers will recall that for a long time there was much talk about an Iran-Pakistan-India (IPI) gas pipeline project. (See Delhi's options beyond Iran, Asia Times Online, March 28, 2006.)

The US-Indian civilian nuclear accord of 2008 is often considered as the carrot that finally tempted New Delhi to cancel its interest in the IPI pipeline, but this interpretation glosses over Iran's severe bargaining maladroitness, which took its toll. The Indian negotiators got tired of Teheran's representatives trying continually to reopen closed chapters of negotiation, insisting on providing a low-quality rather than a high-quality product, and proposing to charge liquefied natural gas prices for gas delivered overland.

The Iran-Pakistan pipeline, supplied by gas from the South Pars field, is planned to begin in Iran's Assalouyeh Energy Zone in the south and run over 1,100 kilometers before crossing the border with Pakistan. Initial capacity is said to be 22 billion cubic meters per year (bcm/y) with a possible final-stage volume of 55 bcm/y.

However, this seems unrealistic in any definite future, as recent statements by Iranian officials involved in the project have made clear that the "final-stage" volume would be achieved only by Pakistan's laying a pipeline inside Iran parallel to the one whose construction has just been suspended.

The tenuous nature of the project's planning is further indicated by the fact that, although Iran says that it has already completed construction of much of the pipeline on its own territory, even the approximate route of the pipeline through Pakistan remains in doubt. Inside Pakistan, it is planned that the pipeline would transit Balochistan and Sindh, but officials there candidly state that the route could change if China's general expressions of interest take more definite shape.

So it is still not certain where the gas will go if it ever gets from Iran into Pakistan. One strong possibility for a long time was that it would go to Pakistan's port at Gwadar in the country's southwest Balochistan, for liquefaction and transport by sea to China. That port opened a little over two years ago following a massive Chinese contribution of both capital and labor to its construction.

A year later, however, China decided not to pursue its plans to construct a 200,000 barrel-per-day oil refinery there, of which it had been intended to send the product northward through Pakistan into southwestern Xinjiang, whence eastward to the energy-hungry Chinese coast.

The reasons given for the unexpected decision were financial, but the lack of security in Balochistan must also have played a role. It is theoretically not out of the question that gas from Iran might go through Balochistan northward following the just-mentioned route. (See Xinjiang: China's energy gateway, Asia Times Online, July 10, 2009.) However, the region is passing through yet another heightened period of social unrest and vocal if not sometimes armed dissatisfaction with the central authorities. Probably it was also feared impossible to guarantee the physical safety of Chinese workers.

Six-sevenths of the 780 kilometers of pipeline to be laid in Pakistan under the present design would go through Balochistan on its way to Sindh. Balochistan province covers four-ninths of the territory of the country although only one-sixteenth of the population lives there. It is one of the poorest parts of Pakistan, but its inhabitants would not under current plans much benefit at all from the industrial construction through their region.

Complicating the situation still further for proponents of the pipeline is the country's still only partial recovery from the July-September 2010 floods. Not only are the power infrastructure and the road systems (including many bridges) yet to be fully re-established, respectively essential for electricity for construction activity and transport for construction materials, but also unexploded ordnance has been washed downstream towards the areas of potential construction sites.

The submersion of much of Pakistan's most fertile cropland would complicate the feeding of construction workers even if transport were fully restored, and even if the local population itself were fully provisioned, neither of which is the case or is likely to be so in the foreseeable future.

The loss of employment due the floods will only increase pressure to reorient any pipeline construction project in the direction of benefiting the local population and not have workers brought in from elsewhere. Yet many of the jobs would be skilled and even minimal training for peripheral jobs assisting the construction would be yet another expense that would complicate whatever plans still exist.

Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.

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