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IPRI Factfile

G AS P IPELINE P ROJECTS

IN

S OUTH A SIA

D R N OOR UL H AQ
ASSISTANT EDITOR

EDITOR

A SIFA H ASAN

Gas Pipeline Projects

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C ONTENT
Preface I. Overview 1 International Gas Pipeline Projects 2 The Globe, (Kazakhstan), Summary of a Report 3 Natural Gas-Coal, Leading Players of the Future 4 Pakistan Oil and Gas Conference 2004 5 The 3rd Pakistan Oil, Gas and Energy Exhibition and Conference (18-21 May 2005) 6 Iran Crisis Casts Shadow Over All Three Pipeline Projects in South Asia 7 A Regional Energy Grid II. 1 2 3 4 5 6 7 8 9 Turkmenistan-Afghanistan-Pakistan Caspian Sea Region: Natural Gas Export Options India and the Trans-Afghan Gas Pipeline Turkmenistan-Afghanistan-Pakistan Natural Gas Pipeline Project Analysis: Pipelines or Pipe Dreams? Pakistan, Turkmenistan, Afghanistan Agree on Multi-Billion Dollars Gas Pipeline Gas Pipeline Talks Begin Protocol Signed to Continue Discussions Afghan 'Pipe Dream' Draws Closer to Reality Pakistan and Turkmenistan Pushes with Gas Pipeline v 1 3 5 12 18 19 21 24 25 27 29 32 34 34 37 38 40 41 41 42 45 47 50 51 53 55 56

III. Iran-Pakistan-India Gas Pipeline 1 Pakistan Proposes Separate Project: Gas Pipeline 2 Gas Pipeline Diplomacy to Promote Peace: Aziz 3 Iranian Minister Invited to Discuss Pipeline Project: Saarc Energy Ministers' Conference 4 Oil Needs Change Strategic Face of Asia 5 Analysis: Iran-Pakistan-India Gas Pipeline Imperiled 6 US Secretary of State Presses India and Pakistan to Abandon Iranian Gas Pipeline 7 Progress on Gas Pipeline 8 India Says under No Pressure Over Iran Gas Pipeline Project 9 Gas Rate, Transit Fee Discussed with India: Iran to India Pipeline 10 Pakistan, India Give Top Priority to Gas Pipeline from Iran 11 To Check Slips, India, Pakistan Set up JWG on Pipeline

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IPRI Factfile

12 Pak-India Agree on Iran, Turkmenistan, Gulf States Gas Pipeline Project 13 Iran Pipeline Cannot be Abandoned, US Told 14 Iran-Pakistan Sign Agreement on Gas Pipeline 15 Deadline Set for Final Pact on Gas Pipeline: Pakistan, India Pledge Commitment 16 India-Iran Relations: A Farewell to the Gas Pipeline? 17 Tri-Nation Pipeline Plan Makes Headway: Foreign Financing Likely 18 Pipeline Assurances IV. Gulf-South Asia Gas Pipeline 1 Pakistan, Qatar Agree to Cooperate in Pipeline, LNG, Oil and Gas Projects 2 Pakistan, Qatar to Speed up Work on Gas Pipeline 3 Qatari Gas Pipeline for Asia in Hamad-Musharraf Talks 4 Musharraf will Discuss Gas Pipeline with Qatar V. 1 2 3 4 5 6 VI. 1 2 3 4 5 6 7 8 9

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China’s Interest in the Gas Pipeline in South Asia Peace Pipeline to China? 71 India Wants Gas Pipeline Extended to China 72 Expansion of India-Iran-Pakistan Gas Pipeline to China – A Strategic Asian Play 73 Pipedreams to Prosperity 74 China Ready to Join Pakistan, India 76 China to Import 50% Oil, Gas Requirements 2020 77 Myanmar-Bangladesh-India Gas Pipeline India-Myanmar Gas Pipeline Through Bangladesh – Pipe Dream? Bangladesh's Government Decides on Gas Pipeline Dhaka Lays Down Terms for Gas Deal Aiyar Warns Dhaka on Gas Pipeline Project Tri-Nation Gas Pipeline: Bangladesh Yet To India, Myanmar, Bangladesh to Sign MoU for Gas Pipeline Project Gas Pipeline Study Bangladesh-Nepal Natural Gas Pipeline to be Studied Bangladesh to Consider Gas Pipeline 79 82 83 84 86 87 87 88 89

Besides meeting the growing energy needs of South Asian region. these projects will have significant economic and political benefits. gas price. 9 August 2005 Noor ul Haq . Iran. Qatar and Myanmar. This IPRI Factfile is a collection of articles and media reports on the gas pipelines in South Asia. transition fee and other technical and financial matters of different pipelines are yet to be decided. Economic cooperation and integration will ensure prosperity and political stability. route. are exploring potential markets for their natural resources. which are surplus in natural gas and oil. These pipelines have already challenged the animosity between India and its neighbours – Pakistan and Bangladesh – as they signify enduring economic linkages between these countries. The projects under consideration are the Iran-Pakistan-India gas pipeline. i. Gulf-South Asia gas pipeline and Myanmar-Bangladesh-India gas pipeline. These pipelines in South Asia are an evolving development as the feasibility issues such as cost. length. Indian petroleum minister Mani Shankar Aiyar has proposed the establishment of an ‘Asian Gas Grid’ which would enable the South Asian states to maximize their economic gains by exploiting the Chinese market as well. Some of the states surrounding the region. Turkmenistan-Afghanistan-Pakistan gas pipeline.Gas Pipeline Projects vii P REFACE The bourgeoning economies of South Asia need energy resources to accelerate their economic growth to break out of the poverty trap. security. Pakistan is situated on some of the shortest land routes between the gas and oil sources and the consumers are expected to play an important role.e.. Turkmenistan. Therefore the analysts consider the gas pipelines as a significant confidence building measure.

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A Gas Framework Agreement for the TAP Project was signed by the Heads of states in a trilateral Summit held in Ashgabat on December 27. which was later proposed to be extended in India. Turkmenistan & Afghanistan from May 29-30. There are three different routes under consideration for the Iran-India gas pipeline viz. Five meetings of the Committee have been held so far and Sixth meeting is scheduled to be held in June in Ashgabat. an agreement was signed. .Gas Pipeline Projects in South Asia 1 I. 2002. 2003. to coordinate and provide necessary assistance to expedite the construction of project. ADB is also in acting as a lead partner in the project. Turkmenistan. The agreement provides for the formation of a Steering Com mittee represented by the respective Petroleum Ministers of the three countries to oversee the progress on the project periodically. 2002. shallow water and over-land. MPNR along with Deputy Minister of Iran National Oil Company (NIOC) has been constituted to review the progress on the project. The Feasibility study is likely to be completed by September 30. The Government of Turkmenistan floated the idea of a gas pipeline from Turkmenistan to Pakistan in 1991. Turkmenistan-Afghanistan –Pakistan Gas Pipeline • • • • • • II. During the trilateral Summit held between the Heads of states of Pakistan. A Committee co-chaired by the Secretary. The committee is assisted by the technical experts from both sides. deep sea. • Different MoUs were signed during the intermittent period but no visible progress could take place due to instability in Afghanistan. ADB has provided financial assistance to the tune of US $ 1. Pakistan has conveyed its full support and assurance for security of supplies to India.00 million for the feasibility study of the TAP project. Iran–Pakistan–India Gas Pipeline Iran – Pakistan Gas pipeline Project was conceived in 1993. OVERVIEW I NTERNATIONAL G AS P IPELINE P ROJECTS I.

At present the feasibility studies of different pipelines from different destination are under progress.php> III Qatar–Pakistan Gas Pipeline • • • • • • Conclusion • • • . Crescent Petroleum signed a new Heads of Agreement with the Government of Qatar in the Year 2000 giving them exclusive rights to export gas to Pakistan. initiated and sponsored a gas import project through an offshore pipeline from Qatar to Pakistan in 1990. BHP has completed the phase-I of the study. India will weigh those options after completion of studies on different routes. while that of overland route is being conduct by M/s BHP of Australia. <http://www. A joint Coordination Committee consisting of the officials from Government of Pakistan. MOU(s) for progressing the development of the Qatar – Pakistan gas pipeline known as the Gulf-South Asia (GUSA) Gas Project were signed in 1991 between the Governments of Qatar and Crescent Petroleum and in 1992 between the Government of Pakistan and Crescent Petroleum but the Project could not take off then due to various reasons. The Feasibility study for the shallow water route is to be conducted by GAZPROM of Russia but they have not yet started the study.gov. Crescent Petroleum and Qatari Government have been constituted to discuss gas sale agreement. the Government advised the quantities of gas that need to be imported by Pakistan starting in year 2010-11. The outcome of the studies as well as findings of working group will be reviewed by Government of Pakistan at an appropriate time and a decision in this regard will be firmed up. In recent exchanges with Crescent Petroleum. Crescent Petroleum has completed the detailed route survey for the whole pipeline at a cost of US$ 4 million.mpnr. It also entered into an MOU with Government of Pakistan on 17th July 2000. Snam progetti of Italy. Also the engineering design of the pipeline was performed by Brown & Root of the USA. Crescent Petroleum International (CP) a Sharjah based company.pk/igpp. At the same time SNGPL & SSGCL have constituted a working group to assess Pakistan’s requirement of imported gas.2 • IPRI Factfile • Feasibility study for the deep sea route is being conducted by M/s.

Now the United States has shown its intention to provide Ex-Im Bank financing and OPIC political risk insurance for a commercial deal. Gazprom of Russia. The reason for all this activity is that Caspian region oil exports can reach 3. and possibly on to India. including oil and gas pipeline investment. Turkmenistan and Russia was crucial. Another part of this project was a crude oil export pipeline from Chardzhou in Turkmenistan. even discussed the modalities and financing arrangements for the US$2. Both pipelines were intended to transit 700 km of wartorn Afghan territory. Pakistan. was courting Afghanistan's Taleban regime to lay a 1.5 billion project. The consortium led by Unocal. and the Kumkol field in central Kazakhstan. The exploitation of Central Asian and Caspian reserves has long been an American dream. where energy demand is high. a leading US company. Trade and Development Agency (TDA) and Overseas Private Insurance Corporation (OPIC) officials are due in Islamabad to explore business opportunities. the Baku-Tbilisi-Ceyhan pipeline for oil producers of Georgia. with a capacity of 1 million barrels per day.Gas Pipeline Projects in South Asia 3 T HE G LOBE (K AZAKHSTAN ): S UMMARY OF A R EPORT As the Afghan war winds down. And Kenneth Dam. Kazakhstan. CentGas. Hyundai of South Korea and Crescent of Pakistan. via Afghanistan. to a terminal on Pakistan's Arabian Sea coast. Azerbaijan. and a stabilized Afghanistan is expected to attract massive foreign investment in such projects during the reconstruction period. could be connected to CentGas's proposed pipelines. . However. will pay a week-long visit to Pakistan and India to discuss trade and investment. as the project was called. Also this month. US companies had previously been working on transporting Central Asian oil and gas to Europe via Turkey. For this. for onward supply to Pakistan and India. Unocal.850 billion cubic feet per year by 2010. including Delta of Saudi Arabia. Iran is contacting Pakistan later this month about its ambitious Iran-India project. a high-level delegation of US Export-Import Bank. Itochu of Japan. was expected to pump 700 billion cubic feet of gas per year. However. The Taleban factor forced the CentGas investors to suspend the project in April 1998.600-kilometer gas pipeline from Daulatabad in Turkmenistan to Multan. as the oil and gas fields of Turkmenistan and Uzbekistan in the Amu Darya basin. this project is again being seen as the most economical and commercially viable. Inpex of Japan.2 million barrels per day and gas exports 4. China and Iran are gearing up their competition for oil and gas pipelines in the region. while TDA would do the feasibility studies for the projects. In the mid-1990s. the United States. Deputy Secretary of the US Treasury. China has shown interest in constructing a gas pipeline from its western Xinjiang province to Turkmenistan.

4 IPRI Factfile transporting all the Caspian basin's reserves through Azerbaijan and Russia would greatly enhance Russia's political and strategic clout. will only last for another 22 years. Iran also hopes to lay pipelines from Central Asia to Iran for re-export to European and South Asian countries. Known oil reserves are just enough for 15 years. which is expected to generate $500 million for Pakistan in the shape of royalties from India. near Karachi. Iran has officially approached Pakistan to formulate a joint strategy for Afghan reconstruction. comprising Pakistan. which is still pursuing its own Kazakh pipeline project. The construction contract was awarded to the China Petroleum Engineering and Construction Company. and has only 19 days of strategic oil reserves. Turkey. Pakistan does not object to any of these projects. Iran. to switch these power stations from oil to gas. However. It will also formally start negotiations with Pakistan this month for the proposed $5 billion Iran-Pakistan-India gas pipeline project. Iran or even China. The aim is to extend the supply routes to thermal power stations. The country's existing 23 trillion cubit feet of gas reserves. It intends to outmaneuver the US by bringing Turkmenistan and Pakistan into its own "CentGas" project before the Western companies re-enter the market. Some initial talks were held when the Pakistani petroleum minister visited Beijing in connection with the White Oil Pipeline Project. and in recent weeks has shown an interest in its own version of the CentGas project. extensive domestic gas pipeline network. which will run from Port Qasim. More talks will be held in coming months. as it needs energy for growing domestic consumption and pipelines offer competitively economic supply routes. and meet 75% of Pakistan's oil transportation needs after completion. Afghanistan and the Central Asian states. Chinese. a program is under way to switch . which is facing the wrath of the United States over alleged sponsorship of terrorism and support of warlords in Afghanistan. and economic cooperation among ECO member countries. a Pakistani project with Chinese involvement in construction and financing. Similarly. Beijing has obvious concerns over the US military presence in Afghanistan and the Central Asian republics. The Government has tried to expand this further with the help of Kuwait Petroleum Corporation. China has been quick to recognize the importance of such a huge oil and gas infrastructure project in the region. on current consumption estimates. causing a shift of the strategic balance in favor of Russia. to northern Pakistan. China's Export-Import Bank has extended $120 million credit for the White Oil Pipeline. if a stable gas supply can be guaranteed. Iran. and International Finance Corporation financing. and work began in June 2001. At present. Pakistan has a good. It signed a deal with Pakistan for the construction of the Gwadar deep port on the Arabian Sea. and. is also trying to revive the Economic Cooperation Organization (ECO). Pakistan relies mainly on imported crude oil and diesel.

Shenhua Group corporation of China has selected a Block in Thar Coal Field to set up a 3000 Mega Watt Power Complex in phases. According to official sources.htm> N ATURAL G AS -C OAL . China a trusted friend of Pakistan is coming up with huge investment in three coal-based power projects. Investment involved in this huge power complex is estimated at $3 billion. and they are looking forward to Kenneth Dam's visit. The US Treasury has announced that Dam will discuss trade and investment. L EADING P LAYERS OF THE F UTURE Natural gas and coal are poised to assume a leading role in the energy sector of Pakistan under the policy focused at cutting down the import bill i. and almost 20% of all motor vehicles have already been converted. Private sector petroleum companies expect an increase in international investment in the energy sector. India. 8 February 2002 < http://www. they say. The . may end its opposition if big US companies participate. Another 250 Mega Watt Power Project at Sonda-Jherruck is being negotiated with Jiangsu Mining and Engineering Corporation of China. $3 billion. will benefit Pakistan. The costly import bill for petroleum products claims almost 30 per cent of the total export earnings of the country on one hand while rendering the huge coal reserves and plentiful of natural gas reserves available within the country.e. after Argentina and Italy. with a message for both India and Pakistan to resolve their differences peacefully. The foreign investors have responded warmly to the incentives offered by Pakistan especially for development of the coal and gas sectors as they are coming up with large investment for power projects in these two areas. This. Pakistan's Ministry of Petroleum and Natural Resources is drafting a new law to establish an Oil and Gas Regulatory Authority and promote private sector investment. Note: Iran's attempt to revive the ECO and formulate a joint strategy with Pakistan for economic cooperation among ECO member states and Afghan reconstruction is a danger the United States must foil if Iran is not to be the main beneficiary of its war against terrorism. Nadeem Malik. The import expenditures on account of oil are feared to increase simultaneously with the increase in demand as well as price in future if appropriate steps for import substitutes are not taken well in advance.westerndefense.org/articles/Kazakhstan/mar02. The Globe (Kazakhstan). given the great interest in pipeline infrastructure.Gas Pipeline Projects in South Asia 5 vehicles from petrol to compressed natural gas (CNG). Pakistan now has the thirdhighest number of CNG vehicles in the world. which is averse to any oil and gas project going through Pakistan.

6 IPRI Factfile China National Machinery Import and Export Corporation has also offered to set up a 100 Mega Watt Power Plant at Sonda-Jherruck. options are also available to import gas from Iran. we would have to develop import substitutes luckily available within the country i. if everything goes well. In order to sort out this problem. 50 per cent of the royalty currently being given to the provincial government may go to the tribal chief while remaining fifty per cent of the royalty to the local government for the development of the remote parts of the country. natural gas and coal reserves. Iran and Turkmenistan are still on. To meet the gas requirements. The additional gas supply of 900 mmcfd through SSGC and SNGPL would cost about Rs20 billion. Besides optimizing the indigenous resources. The minister said that resumption of oil and gas exploration activities in areas under force majeure in Balochistan is also under active consideration of the government. In order to save the hard-earned export receipts and to strengthen the economy. additional pipelines and compression facilities. It may be noted that about 80 per cent oil and gas potential areas are under force majeure where oil and gas exploring companies cannot operate against the will of the tribal population. Besides Chinese investment in coal based projects. Financing for these additional supplies would be arranged through own resources and commercial borrowing. One of the three-pipeline projects is likely to materialize. The Minister said that Pakistan's total petroleum imports represent 41 per cent of the country's primary energy supply. This programme. which is eating up 30 per cent of total export earnings every year. This project has a . steps are being taken for rehabilitation of existing network. federal minister for petroleum and natural resources while talking to PAGE said that time has arrived to assign greater role to the natural gas in our economy.e. The value of petroleum imports is estimated at $3 billion. Negotiations between India. Qatar and Turkmenistan through pipelines. certain steps are underway to accelerate exploration activity in Pakistan. In order to enhance exploration programme. Although the Afghanistan leaders are extending assurances for security of the Turkmenistan pipeline to be passed through Afghanistan yet this project may take some more time to materialize till the settling down of the dust in that country. may help accelerating the exploration activity in Balochistan. Primarily. Smith Associates Power and Mining Company of USA is conducting feasibility for a 450 Mega Watt Coal fired power plant at Lakhra on right of first refusal basis in which the direct foreign investment is estimated at $400 million. the gas pipeline project was designed to route through Pakistan and originally destined for neighbouring India. Usman Aminuddin.

3 MMB Dhurnal: Balance 0. Original recoverable reserves were 41. having a balance of 4. He said that besides swift development of our local gas resources time is ripe to go for cross border pipeline for which three options are available.Gas Pipeline Projects in South Asia 7 length of 1400 kms with a diameter of 48 inches and a supplying capacity of 2 billion cubic feet daily.2 trillion cubic feet against the original recovery reserves of 1. 44 inches diameter and a capacity of 2 billion cubic feet daily. The third option is Qatar-Pakistan gas pipeline of 1600 kms. This project originating from Pars North field will terminate at Sui in Balochistan and then onward to India if the deal struck between the countries involved in this cross border pipeline project. Provide "Parking" capacity in respect of gas import contract obligations.6 trillion cubic feet of natural gas against the original recoverable reserves of 8. Pirkoh: Currently having a balance of 1. Add reliability to gas supply. Iran-Pakistan gas pipeline has a length of 1650 kms. based on the availability of hydro power plants. The minister identified the following spots for possible gas storage reservoirs: Sui: currently. This project is to be routed through Qatar to Gwadar through Arabian Sea. Gas Storage Reserves The petroleum minister feels that imported gas through one of these pipelines would require large underground storage due to following reasons: • • • • • Meet seasonal primarily fuel demand. Mari: currently.6 trillion cubic feet when the production was started from this source. having a balance of 2. 48 inches diameter and a capacity of 3 billion cubic feet daily supply.1 trillion cubic feet against the original recovery reserves of 6. Meyal.4. . particularly in the northern region of Pakistan.8 trillion cubic feet.1 and original recovery reserves 50.9 MMB Dhullan: fully consumed. Increase base load. balance 0.3 cubic feet at the time of inception. Meet seasonal demand for power generation.1 MMB while original recoverable reserves were 49.

2 per cent.755 in 2020. Cement 0. If this formula goes on almost 80 per cent of the potential . the current natural gas reserves to production ratio are estimated for next 66 years as against oil reserves estimated for next 37 years.9 per cent. An analytical review of POL consumption shows that demand for oil and petroleum products has grown at an annual consumption growth rate of 5 per cent. Pakistan Scenario Currently. 4.5 per cent.875 TCF per year. Globally speaking.8 IPRI Factfile Demand Energy demand grew at an annual consumption growth rate of 4. Gas Demand Projection The current demand for natural gas (estimated at 2.1 per cent. Fertilizer (Fuel) 5.061 mmcfd in 2000) is to increase up to 3. while demand for natural gas grew at an average of 6 per cent. which saves about $3 billion a year for the country.1 per cent goes to power generation.8 per cent in the last five years and is expected to grow at a similar rate till the end of the current decade. Pakistan has 24 trillion cubic feet (TCF) of natural gas reserves i.785 mmcfd in 2010 and up to 5. Fertilizer (Feedstock) 17. Sector-wise break up of the gas consumption indicates 37.6 per cent.7 per cent.559 mmcfd in 2005. The current rate of production of natural gas is 0. The relative share of gas in primary energy supply has increased from 37 per cent to about 41 per cent in the last five years. It may be noted that the local population demanding their share in the yield disallowed the oil exploration companies to carry on their operations in the tribal areas. The decision has been taken to give a free hand to the foreign companies engaged with oil and exploration in Pakistan. The government has decided to do away with the royalty. out of the 5 per cent royalty. transport (CNG) 0. Total natural consumption during 2000-2001 was estimated at 774 billion cubic feet. Looking at various advantages. the natural gas has become an obvious choice for developing economies being economically attractive and environment friendly fuel. Domestic consumption 18. According to new formula. 50 per cent would now go to the tribal Chiefs or Sardars and the remaining portion will be given to the local governments of the respective provinces.e. equivalent to 467 million-Ton Oil Equivalent (TOE). Commercial 2. which was so far received by the provincial governments from the oil exploring companies in the energy sector.9 per cent while general industrial consumption is estimated at 17.

e. The project has three aspects i. during his recent visit to Pakistan has said that a decision on the issue of taking a gas pipeline from Iran to India either through Pakistan or deep-sea would be taken after completion of studies on both the options. As regard to other proposals of bringing gas and oil from other regional countries from Gulf or Central Asian countries he said the thrust of the government was obviously on developing indigenous resources. promoting vehicular use of CNG in Iran and curbing smuggling of petrol from Iran to Pakistan. being debated for the past several years. Zanganeh termed the signing of MoU for pre-feasibility study of onshore line an important step in reaching at a final decision of the project. However he said they had always supported projects of regional pipelines. A Memorandum of Understanding has also been signed with his host counterpart. Aminuddin has assured Pakistan's political support for the project. He said the talks with the ADB and other international banks should start for lining up the funds. Usman Aminuddin. The other option of laying the pipeline in deep sea.Gas Pipeline Projects in South Asia 9 areas in Balochistan would be open to grant concessions to the companies for the research and surveys in the oil and gas sector. Earlier Usman expressed Pakistan's strong desire to work closely with Iran on different projects in the field of oil and gas. He said Iran had been heavily subsidizing . which involved political commitment. The pre-feasibility study on taking as pipeline through land route. The end of 2002 would complete the studies on both these alternatives of the super project of gas pipeline. Talking about smuggling Aminuddin said it was an issue which was concerning both Iran and Pakistan. has been completed. Zanganeh when asked about the financing of the pipeline project said that total cost would be over four billion dollars and a consortium of International banks and financial institutions would have to be engaged for the provision of funds. We would have no objection on a pipeline for supply of hydrocarbons to India through Pakistan. he said. Iran Iranian Minister for Petroeluem Bijan Namdar Zanganeh. economic and tactical. would be studies by an Italian company. an option which would result in substantial earning for Pakistan would be carried out by an Australian company Broken Hill. We are ready to move forward quickly and a Pakistani delegation would shortly visit Iran for further discussion on proposals of exporting motor gasoline to Iran. political. apparently capital intensive preposition. The first phase of the project.

. Short Supply Beside development of local gas infrastructure to meet the growing need of industrial and power sector. Wapda and gas companies were at loggerheads over the payment of outstanding dues. which forced Wapda to consume 1. The gas supplied during 2000-01 on daily average basis was 403 mmcd. Labor and Transport says that the global energy demand is expected to increase by 50 per cent by the year 2020 and a large portion of this demand will be met from Coal. Coal—a Viable Energy Option Dewan Muhammad Yousuf Farooqui.5 billion which according to the WAPDA's chief was highest-ever and alarming too. the import of gas gradually become imperative to respond to the economic needs of the country. In the power generating sector. had threatened to suspend gas supply to thermal power stations due to non-payment of their arrears. Gas supply situation for Wapda power stations further aggravated during the current fiscal as supply to its various stations from Sui Northern Gas Pipeline Limited (SNGPL) has been reduced drastically since November last.5 billion. He also gave the references of a high level meeting chaired by the President in November in which the President had instructed that the highest priority be accorded to the power sector in supply of gas. WAPDA is already facing acute shortage of about 250 to 300-mmcfd gas whereas its total requirement is 703 mmcfd. 15 mmcfd in December and 33 mmcfd in January against the requirement of 243 mmcfd of the whole system.21 million tones of furnace oil resulting in additional cost of Rs4. Provincial Minister for Industries. on several occasions. which were pending against the utility since long. The Wapda chairman has sought the personal intervention of the Petroleum Minister to improve gas supply for the thermal power stations. Wapda chairman complained that the SNGPL supply on daily average basis was 55 mmcfd in November.10 IPRI Factfile its petroleum products and the smuggling was equally hurting them besides causing harm to Pakistan's economy. The Chief Executive Secretariat however has always come to the rescue of the utility companies. These companies.23 million tones costing Rs2. Similarly. Resulting furnace oil consumption has increased and during January it touched about 0. Sui Southern Gas Private Limited (SSGCL) was not supplying sufficient gas to Thermal power Stations Jamshoro and GTPS Kotri.

Sonda—Jherruck Coal Field in Thatta District has estimated reserves of 7. Instead of using cheaper fuel a large portion of energy is generated by using the costliest fuel that furnace oil. Gas and Nuclear sources is 17 per cent each.Gas Pipeline Projects in South Asia 11 Worldwide.6 billion tons of coal. The New Energy Policy given by the Bush administration includes major funding for development of clean coal technology. the electricity demand may further increase in the days to come. kilometers with 9. Four blocks in the Thar coal field have been fully investigated. • • The present government has started a programme for fast track development of coal in the province of Sindh. Despite having much larger coal deposits approximately estimated at 185 billion metric tons in Pakistan. Thar Coal Field located in Tharparkar is spread over an area of 9000 square kilometers. coal will always remain the single largest source of energy for mankind. The blocks are spread over an area of 353 sq.3 billion tons. In view of the expected growth in economic activity in Pakistan. In the Asian region 45 per cent power is generated from coal. its use for energy generation is almost negative that is only one per cent as compared to 45 per cent used by other Asian countries for power generation. In view of large reserves the world over. By comparison the share of Hydro. the primary use of coal is power generation. This is expected to increase to 60 per cent by the year 2020. The latest technologies being used for making clean coal have made coal no longer a dirty fuel. Today the world gets 38 per cent of its electricity from Coal. Three major coalfields in Sindh are: • Lakhra Coal Field in District Dadu with estimated deposits of 1. Recently a Task Force has been set up for Thar coal development under direct supervision of the . Additional power demand in Pakistan by the year 2010 is estimated at 9000 MW. Over 99 per cent of Pakistan's coal deposits are located in the province of Sindh.64 Billion Tons is well developed and ready to maintain the supplies. Figures for some selected countries are: South Africa 90 per cent Australia 84 per cent China 80 per cent India 66 per cent Germany 51 per cent USA 56 per cent Clean coal technologies are making coal more attractive. Reserves at Thar coalfield are estimated to 175 billion tons.

as I ponder the ramifications of the topic at hand "Are Regional Gas Pipelines Possible". ladies and gentlemen: I would like to thank the Petroleum Institute of Pakistan and the Mediators Conferences for organizing the Pakistan Oil and Gas Conference 2004 after a gap of nearly four years. I cannot help but be impressed at the progress that has been made in the last half decade or so in making the dream of transporting energy resources. However.com/database1/cover/c2002-19. The process of conversion from oil to coal has been started in the cement industry as well. specifically gas in the Asian region. .12 IPRI Factfile President of Pakistan. Enhanced use of locally available natural gas and coal would certainly help producing cheaper electricity in Pakistan. The government has also started a coal development programme aimed at development infrastructure in the coalfields.pakistaneconomist. Chairman. without hindrances of political borders. a step closer to reality.asp > P AKISTAN O IL AND G AS C ONFERENCE 2004 ARE R EGIONAL G AS P IPELINES P OSSIBLE ? Presented by Dr. Amanullah Bashar. The purpose of the task force is to ensure smooth implementation of coal mining and coal fired power projects. The real impact of this policy would however be fruitful when the benefit is also passed on to the consumers. 10 March 2002 <http://www. Pakistan Mr. Conclusion The focus of the current energy policy of the government is to assign greater role to the natural gas and coal in power production obviously to cut down huge expenditures on import of oil and to save the hard earned foreign exchange. A sizable portion of future power demand will now be met from coal based power generators. the power consumers have no option but to reluctantly pay the price for power consumption that is beyond their means and also highest in this region. Currently. Four years is a long time in a dynamic sector such as energy where resource availability is as much subject to the vagaries of nature as to political risks. Naved Hamid Senior Economic Advisor Pakistan Resident Mission Asian Development Bank 4 May 2004 Islamabad. Sindh Coal Authority is actively promoting and helping private investors to set up projects.

I would first of all like to talk about the Turkmenistan-AfghanistanPakistan pipeline (TAP). However. to talk today on the topic of trans-Asia pipelines fully appreciating the fact that there are political differences in the region. By 2012. I would first of all like to identify some of the negative opinions prevailing against regional gas pipelines across Asia. . finance. can the business of supplying natural gas through pipelines traversing 2 or 3 countries. India will be the main importer of gas with Bangladesh and Myanmar as potential exporters. In addition the 3 countries have agreed to the following: • • • • To establish a consortium led by one or more major international oil and gas companies or leading gas transmission companies. materials and personnel for the construction and maintenance of the pipeline. Over the last decade I have not heard any other argument against the idea of transnational pipelines. The ADB has supported a feasibility study through a grant of $ 1 million that is nearing completion. construct and operate the pipeline. Pakistan could also be an importer of gas. I wish. No taxes. royalties. The 3 governments will provide land and free movement of goods. A Gas Pipeline Framework Agreement has been concluded among the 3 countries confirming their commitment to the Project.Gas Pipeline Projects in South Asia 13 Before going into greater details on the progress that has been made. Over the last couple of years there has been considerable interest on the development of this Project that can transport 2. The consortium will design. in view of the differences. Afghanistan.5 billion cubic feet of natural gas up to India. and Pakistan have formed a Steering Committee comprising the Petroleum Ministers of the 3 Countries to progress the project and the 3 countries have invited the Asian Development Bank to act as the lead development partner for the project. Each country will confirm the quality of gas it will use from the pipeline for its own consumption. Pakistan's territory could be used to transmit gas from energy surplus Central Asian States. or even a gas grid of transnational pipelines develop in Asia? Let us first look at the various pipeline options that are available today for either import or export of gas in South Asia. The consortium will be responsible for the transmission of the gas and will be paid a tariff in accordance with a negotiated gas price. duties or other payments will be levied for activities directly related to the Project. therefore. The theme of these opinions remains the same: "large political differences" will not let transnational pipelines succeed. value added tax. The Governments of Turkmenistan. Amongst the countries in South Asia.

This however needs to be established on the basis of further work to be undertaken by the Consultant. this would substantially increase the size of the potential market. going up to 1. Two routes for the pipeline were considered. Regarding the demand for gas. Similarly.700 kms that can transport upto 30 billion cubic meters of natural gas annually from the Daulatabad fields in Southeast Turkmenistan to consumers in Afghanistan. In order to progress the Project the Steering Committee held a series of meetings.3bcfd by 2010 going up to 0. There are also political risks.5 billion. The TAP pipeline can supply a very large quantity at competitive prices. the formation of the consortium.4 bcfd by 2015 and 2. and. Pakistan and possibly India. There are of course risks that need to be addressed to make the project viable and successful. These pertain to gas supply and markets. of course has a huge requirement. I will talk about some of these risks here. The Sixth Steering Committee Meeting held in June 2003 chose the Southern Route to be surveyed and studied in detail first. supplemented by some demand for Afghanistan. • • The Gas Supply and Market Risks: An independent auditor needs to certify the gas reserves of the Daulatabad gas field. Should India at some point agree to participate in the Project. This study is likely to be completed by September 2004. While there is a market in Afghanistan and we anticipate a reasonable demand from Pakistan. Utilization of this potential will help counter unforeseen disruptions and shortages. the legal and regulatory framework. The Project will also need confirmed markets for the gas to confirm financial viability of the pipeline. the figures need to be firmed up.2 billion cubic feet per day (bcfd). They will need to clearly define the basic legal and regulatory framework within which the consortium will operate. The final cost of the Project is estimated at $2-2. the gas demand figures conveyed by Afghanistan indicate a shortfall of 0..9 bcfd by 2015. the Northern Route through Mazar Sharif and Kabul in Afghanistan and Islamabad and Lahore in Pakistan and the Southern Route through Herat and Kandahar in Afghanistan and Quetta and Multan in Pakistan. ADB has .7 bcfd by 2020. it is also proposed to evaluate the potential for underground gas storage reservoirs in Pakistan. The Project appears feasible based on a moderate growth rate projected for Pakistan.14 IPRI Factfile The TAP Project consists of a gas pipeline of about 1. it is estimated that Pakistan's shortfall by 2010 will be 0. India. Under ADB's Technical Assistance for the Project. Legal and Regulatory Framework: The Host Country Agreements between the partners have to be comprehensive. should it agree to participate in the Project.

Consortium Formation and Financing: The structure and participation in the pipeline consortium and its subsidiary companies should be agreed by the participating companies. A pipeline can also be built adopting the offshore route outside the territorial waters of Pakistan. One of them is the Iran-India natural gas pipeline. Iran-Pakistan-India Pipeline Project: In January 2003 the Government of India signed an MOU with the Islamic Republic of Iran to establish joint ventures to invest in oil and gas projects in Iran and India. i. While a pipeline can also be build through the deep waters of the Indian Ocean avoiding the Pakistan Economic Zone. this entails a much higher capital cost and also technical problems. These must be finalized. So the most feasible option is the overland route. I have talked of the issues and risks pertaining to the TAP Project here since these would be common to most pipeline projects. iii. ii. which are being reviewed by the governments. I would now like to look at other pipeline possibilities. Moreover the coast offshore of Iran and Pakistan exhibits seismic activity because of plate movement that raises technological hurdles. Financing of the pipeline has to be arranged in principle and the financing required for the development of the Daulatabad field secured. Under the Law of the Sea.Gas Pipeline Projects in South Asia 15 • • • already prepared a draft which is under finalization at the present time. Security Issues: The concerned governments will have to ensure the smooth running of the pipeline and its protection from unlawful elements. Gas Sales and Purchase Agreements. . It can be built over land crossing Pakistan and entering western Rajhastan covering a distance of roughly 2. ADB has prepared drafts. Under Phase I the gas pipeline would be completed from Iran to Pakistan and then under Phase II from Pakistan to India in case of willingness of India. The Government of Iran wants the $3 billion pipeline to be completed in two phases. confirmation for building such a pipeline is required from Pakistan since it passes through the Exclusive Economic Zone of Pakistan and permission is required from Pakistan to conduct surveys in its waters. We believe the issues and risks can be addressed.600 kms. The issue is currently under negotiation between the Governments of Iran and Pakistan. There are 3 options to build this pipeline.

The fact that they have not yet reached fruition. The pipeline can transport natural gas in large quantities to Japan for an extended period of time. It is therefore clear that there are a large number of options/projects/plans that can be developed for transnational pipelines in Asia. there have been signs of greater stability returning to South Asia. which will deliver Qatar gas through a 1. Korea and Japan. In the case of exports from Central Asia. the one singular reason often quoted is the sensitive Indo-Pak. Japan. The Project is currently under negotiation between the Government of Pakistan and Crescent Petroleum of UAE. gives rise to the topic we have before us today can these proposals be translated into reality or will they remain only just on paper? Let us consider the reasons why these pipeline projects have not taken off. The question here is basically whether Central Asian sources can and will present themselves as being cooperative rather than competitive. the Chinese pipeline company CNPC together with the Japanese trading house Mitsubishi visited Turkmenistan to propose what became known as the Energy Silk route pipeline bringing gas from Turkmenistan to China. In addition there are a host of gas pipelines proposals being developed across Central Asia. In late 1992. as the combined reserves of the three gas fields are estimated at 17 trillion cubic feet (equivalent to 485 billion cubic meters).7 billion. since the mid 1990s Chinese companies have been active in investments in Kazakh fields with the intention for building oil and gas pipelines to China. Recently. are expected by 2008 with an extension of the pipeline to Tokyo in the same year. The recent SAARC Summit held in Islamabad. the thaw in India . This proposal is yet to develop further. Is this just because of political compulsions of the various countries that are concerned.16 IPRI Factfile Qatar-Pakistan Gas Pipeline: There is a renewed interest by the Government of Pakistan in the Qatar-Pakistan Gas Pipeline Project worth $2. The Project could supply 1. In the context of South Asia. Let us first take a look at the political context in South Asia today. Initial supplies to Hokkaido. the most quoted reason is the perceived difficulty in doing business with countries emerging from the old soviet system.600-km pipeline to Pakistan. or are there other historical/economic/technical reasons that have possibly delayed these projects. It is likely that Sakhalin 2 will look at exports to South Korea. In all probability this pipeline will become a reality within this decade. and win over the Asian markets. and Indo-Bangladesh relations. Again.6 billion cubic feet to Pakistan. coming from the Sakha gas fields in Russia with possible exports to Japan and to China is likely to have a significant impact on future gas business in Asia and the Middle East. In the context of other pipelines in Asia.Pakistan . the proposed Sakhalin pipeline.

The World gas scenario has changed rapidly in the last decade. In conclusion I would like to state that. The ADB remains committed to the cause of poverty alleviation and economic growth. as the country slowly rebuilds are some notable developments that augur well for the future of regional gas pipelines. Under a moderate GDP growth rate scenario of 3. I believe that during the course of this decade some of the planned transnational pipeline proposals will come to fruition. To this end we believe that transnational gas pipelines will play a large role in enhancing regional cooperation and contribute significantly to economic growth. . as an independent regulator for the industry as well as the deregulation of prices of petroleum products are examples. refining and distribution of energy resources have given way to intelligent perceptions of new economic realities where counties now realize that the driving force in the new World order will be growth and development.7 bcfd by 2020.8%. and promote regional security. the demand for gas will steadily outpace the supply of domestically produced gas. In the case of Pakistan. ORGA. Pakistan's estimated shortfall by 2010 is 0. Areas of sovereign domain in extraction. In the "chicken or egg case" of whether there should be a resolution of political issues first or whether economic development will come first. Natural gas has come a long way from being a "not-in-demand" product.4 bcfd by 2015 and 2. Country-to-Country interactions have introduced changes in the way countries do business with each other.. And the most robust growth in demand is expected to take place in developing countries where the overall demand will rise more than what it will in the developed countries. In the context of Pakistan. It is today the fastest growing primary energy source. the formation of the Oil and Gas Regulatory Authority. there have been changes in regulatory regimes enabling freer participation by the private sector as the public sector unbundles activities it carried out previously.Gas Pipeline Projects in South Asia 17 relations accompanied by various confidence building measures like the resumption of communication links and greater stability in Afghanistan. firstly. the winner will be economic growth and development.2 billion cubic feet per day (bcfd). the above efforts have been accompanied by technological innovations that have made possible the delivery of gas across countries possible in the first place at reasonable cost. going up to 1. Suffice to say that much of the demand will come from India and the People's Republic of China. I believe. They will provide cheaper and cleaner energy. generate income that can be used for addressing poverty. as Pakistan's population grows and known gas reserves are steadily used up. which currently have very low per capita gas consumption as compared to consumption levels in the more industrialized and developed countries. Secondly. The natural gas share of total energy consumption is globally expected to increase from 23% in 2001 to 28% by 2005.

Gas production during the last five years has risen by 62% to over 3. resulting in over USD 950 million of investment in the Oil and Gas industry of Pakistan. 526 wells have been explored over 146. Demand for petroleum products is expected to stay steady at 18 million tons per annum with current indigenous production of Oil in Pakistan at 60.000 sq km's of area.com/industry%20overview%20o&g. < http://www. increasing the share of Gas in the Energy mix of the country to 45%. G AS AND E NERGY E XHIBITION C ONFERENCE (18-21 M AY 2005) AND Oil and Gas are two of the major components of Pakistan's Energy Mix.pogeepakistan. making Pakistan the world's 3rd and Asia's largest consumer of CNG in the transportation industry. Iran and Turkmenistan. In Pakistan.000 km's. with the demand for natural gas growing at 8% per annum. This has given a new dimension to the transnational gas pipeline projects from Qatar. this figure is expected to increase to almost 100.5 BCF / day. <http://www. In this regard.asp> T HE 3 RD P AKISTAN O IL . the government has adopted policies to increase the share of indigenous energy resources of the country.000 barrels per day in the next five years. still only 18% of the population has access to natural gas. contributing more than 82% share to the 48 million TOE of energy requirement in Pakistan for the current year.5 million. The commercial requirement of energy in the country has doubled over the last decade.000 barrels per day. The total number of vehicles running on CNG has reached over 0. in the last year. gas discoveries and supply are not keeping pace with the increased demand and therefore the requirement for imported gas has become inevitable with an expected shortfall of 600 MCF per day by 2010. With the increased exploratory and production activities in Pakistan. The two gas distribution companies in Pakistan have been investing over USD 200 million a year to increase the capacity of the existing distribution networks of 60.htm> . However.org/Documents/Speeches/2004/ms2004017. These wells have provided gas reserves of 45 TCF.adb. with a success rate of 1:3:7. However.18 IPRI Factfile Thank you once again for inviting me to speak at this important conference. which are seriously being considered to cater to the energy requirements of the region.

Although this has actually diluted the enthusiasm considerably in the original Indo-PakistaniIranian gas pipeline. Both India and Pakistan responded positively to the Iranian idea. hoping for transit fees it could charge.Gas Pipeline Projects in South Asia 19 I RAN C RISIS C ASTS S HADOW O VER A LL T HREE P IPELINE P ROJECTS IN S OUTH A SIA KARACHI. America has excellent relations with both India and Pakistan. The US has minced no words in opposing the project. Pakistan that was originally enthusiastic about this project became gradually cool toward it. bypassing the two older Russian-controlled pipelines: one in the north directly from Russia to Europe and the second from Baku to Turkey through Black Sea and busy Straits of Bosphorous. indeed Pakistan showed keenness to join the project. is anxious to conclude an agreement with Iran for assured gas supplies through an overland pipeline through Pakistan. with a rapidly expanding economy. a named member of Bush’s Axis of Evil. June 13: South Asia has decided to enter the Big League nations’ struggle to secure oil (and gas) supplies that are not (yet) under the sole superpower’s control. America . India. Needless to say all of ME oil is under tight US control. promising to help make it a global greater power. But Pakistan’s climbing on the Indo-Iranian bandwagon was not single-minded: It actually adopted the policy of welcoming all schemes of transporting oil in any shape through pipelines. The idea of this gas pipeline originated in Iran for both political and commercial reasons. The rate at which the US is acquiring control over the vast deposits of hydrocarbons (oil and gas) in former Soviet Central Asian Republics was highlighted by the recent commissioning of a new oil pipeline to take oil from Caucasus directly to Europe. both countries go on saying that they will ignore the American objections and remain committed to the gas pipeline project. It emerged into full view last March when US Secretary of State Condoleezza Rice termed the project as ‘not a good idea for Pakistan’. except that of Iran. It raises questions. While the US is assiduously wooing India. Pakistan and India initially seemed not to have taken the American opposition to the project into their calculations. But India’s Petroleum Minister Mani Shankar Aiyar visited Islamabad last week and persuaded Pakistan to endorse the IndoIranian deal. Whereupon India too has begun showing lively interest in two other pipeline projects. Indians seem to have rejected the American dislike of this project on the ground of their burgeoning energy needs that require a secure source of supplies. Its background is that serious 25 years old rift with the US. with the latter trying to isolate Iran.

not to speak of relative success of Chinese diplomacy in Southeast Asia. even Nepal and Burma. though the latter have strongly revived their Shanghai Six – China is also trying to woo India. There are two other pipelines being actively discussed in Pakistan. The company that will set up the pipeline and manage the distribution of these hydrocarbons is a composite subsidiary of major American oil corporations. Kyrghistan. with a GDP growth of 7 to 8 per cent. indeed Pakistan’s prosperity. the gas pipeline project looks wobbly. Much will depend on how the three major crises are resolved or when the push comes to shove: over North Korea’s nuclear Weapons of Mass Destruction. Sri Lanka. the US is way ahead of its chief rivals. Bangladesh. . an imperial enterprise. fight al-Qaeda and winning peace in Afghanistan. This UNOCAL project. But Pak-American relations also include Pakistan’s various vulnerabilities. The aim of 21st Century Project. Uzbekistan and Kyrghistan to their side and to meet China’s needs on a (secure) permanent basis. One is for oil to be brought from Sharjah under waters of Persian Gulf through a pipeline. they will be carried through a pipeline to Afghanistan and Pakistan’s newest port at Gwadar to be exported to the rest of the world. on Taiwan. Americans seem to have some minor share in the project. when and if it succeeds. This is of course pure geopolitical rivalry between the hyper power and the two giants of Asia: Russia and China. Kazakhstan as possible to Gwadar for export. and indeed Iran. though what the Israeli lobby. From various angles. The other is a major three-country project: Hydrocarbons will be of Turkmenistan. America is keen that this project should be implemented and should succeed.20 IPRI Factfile heavily depends on Pakistan for the conduct of War on Terror. China’s ability to stay on good terms with authoritarian rulers can stand it in good stead in all Southern Asian regions. though the governments in Islamabad and New Delhi are upbeat for the record. With the passage of time. Both the latter are trying to win over the rulers of Kazakhstan. the danger of war over them goes on decreasing. Uzbekistan. as of now. the US may have acquired effective control over most of oil of former Soviet Republics in Central Asia. Neocons and hawks can do to make or unmake America’s Asian policies remains uncertain. All that can be said is that. being backed by American government to the hilt. is sustained mainly by US aid. goodwill and help in sharply reducing the debt-servicing burden. This pipeline is intended to transport as many hydrocarbons from Turkmenistan. The Russians are not involved in UNOCAL or the new pipeline from Baku to a Turkish port via Georgia. Pakistan. This project more or less completes the American design of being able to carry (and control) as much oil from various regions of former Soviet Union in Asia. What the final upshot of this non-ideological struggle will be cannot be foreseen.

Afghanistan situation can not be said to as amenable to improvement as Pakistan’s for the reason that continued presence of foreign troops is an incitement to rebellion – which is vital to the survival of Karzai regime. the issue is becoming so pressing that there is hardly any choice for these countries except to cooperate. west-east. 13 June 2005 < http://www.htm > A R EGIONAL E NERGY G RID The imperatives of geo-economics are competing with geopolitics and propelling countries in the region including Iran.com/archives/200506/P1_mbn. As to the future of the Iran-Pakistan-India gas pipeline (IPIP) project. Sharjah. At some stage. Russia and China. Mani Shankar Aiyar. . The final details about gas price. Any US intervention in Iran will be like 15 or 20 Iraqs. The three countries are contiguous to one another. The economics of Sharjah pipeline is likely to knock it out. though dollars alone can not decide the outcome of titanic geo-political struggles among the US. nothing definite can be said. In fact.satribune. There is thus the crisis over Iran casts a long shadow on all the three pipelines from Iran. The writer is a seasoned analyst who contributes to several Indian and Pakistani newspapers M B Naqvi. The project is expected to begin by 2006 and be operational by 2009. The US favored UNOCAL pipeline has to run the gauntlet of what is a guerilla war in Afghanistan and to a smaller extent the law and order situation in Pakistani Balochistan. the same Pakistani Balochistan. But geo-strategic struggles need not always demand wars: diplomacy backed by plenty of dollars – an art in which the US excels – can do wonders. and India towards closer economic collaboration. Notwithstanding the US opposition. serious negotiations are afoot among the three countries. and Turkmenistan. Nothing can be said about the future in that case. But after what has happened in Iraq and Afghanistan (to a smaller extent). tenders for construction. Europe and Japan will also actively enter the new Great Game in Asia to make it even more complex. and routes are still to decided. Pakistan.Gas Pipeline Projects in South Asia 21 would primarily require the subordination of Iran at least. if not North Korea. though. Following the visit of the Indian petroleum minister. The law and order situation in Pakistani Balochistan can however vastly improve if good governance and political savoir faire can be brought to bear on it. One thing is certain. Even the Iranian pipeline will have to traverse. to Pakistan recently a joint working commission was established between the two countries.

as the Turkmenistan gas reserves are still unproven and instability mars the Afghan scene. on the other hand. and is preoccupied with recent Iranian overtures towards normalization of ties with Iraq. from Pakistan’s view point these options are neither technically feasible nor cost-effective. Although contingent upon regional developments and US reaction. the compulsions for energy cooperation remain on top of the national agenda. The pipeline complex would boost industrial infrastructure. Its burgeoning domestic energy needs will double by 2010. Iran is acting in a self assured manner. As the US policy options for military intervention in Iraq are narrowing day after day. Iran has its own perspective. thereby adversely affecting Washington-Islamabad ties. The Qatar option. the US preference is for the TAP gas pipeline project. The US opposition to the IPI is based on the following. However. This would be almost close to $700 million a year that it gets from the US as economic assistance. the US faces difficulties: is tied down in Iraq. Moreover.22 IPRI Factfile it is a “win-win” game for the stakeholders: Iran gets much needed revenues for its gas sales. Second. On the energy front. academia and other civic groups would continue to oppose it strongly. is quite costly. Regardless of the type of government in Iran. Given its size. However. First. the regime in Iran is not as isolated as was that of Saddam Hussein in Iraq but is engaged with the European Union. The US wants Pakistan and India to look at the TAP and QatarPakistan options. create jobs and help . Compared to Pakistan. Paradoxically. Under the present circumstance.US Karzai government in Afghanistan and giving out the contract to a US company for pipeline construction. population. This has to do with the bolstering of the pro. media. it is cumulatively adding to Iran’s sangfroid as a regional power of consequence. Pakistan’s interest lies as a transiting state that would gain $600 million royalty a year. Interestingly. economic strength and cultural nationalism. this is not to suggest that the option is going to be easy. Iran’s “look east” policy and the forging of ties with major regional powers (India. the US opposition to the pipeline goes against the grain of its philosophy of normalization of ties in South Asia through economic CBMs. China has also expressed its enthusiasm for the same. China and Russia) are to its advantage. India is energy-starved and is keen to be involved in the Turkmenistan-Afghanistan-Pakistan (TAP) and Qatar-Pakistan gas project. the Iran and Libya Sanctions Act of 1996 (ILSA) forbids more than $20 million of investment in Iran on the pain of the termination of US economic assistance and sanctions. even if the US administration gives up its opposition the Congress. given the stake the US has in a country where it intends to stay lodged at least for the foreseeable future. despite facing encirclement by the US forces.

having faced sanctions and isolation in the last 26 years the regime seems determined to pursue the generation of nuclear energy for peaceful use. Pakistan is not investing in Iran’s pipeline infrastructure for which the latter would be responsible as an exporting state. would move towards a stable world order in the interest of the global community and the US.Gas Pipeline Projects in South Asia 23 poverty alleviation in Balochistan and Sindh.com/2005/07/25/op. Also..” should be interested in the latter’s sustained economic development. Perhaps China. in the process. besides contributing to resolution in the subcontinent. the US will be sending negative messages to Canada. says the US scholar George Perkovitch.” and. 25 July 2005 <http://www.e. extremism and nuclear weapons.dawn. especially of economically underdeveloped Balochistan. Pakistan and others could persuade the US to review its opposition to the energy “linkup” plan in the region. Pakistan will only act as an energy “corridor state. Maqsud Ul Hasan Nuri. by trying to block Iran’s plans and selling India nuclear technologies.htm#4> . Hence. that holds Pakistan as a “major non-Nato ally” and “strategic partner” committed to combating “international terrorism. is an “economically necessary. After all. The IPI project. In fact. TAP or Qatar-Pakistan projects. The US. The building of energy grids through pipelines and the promotion of economic interdependency and interlinkages will be synergistic steps. environmentally-friendly and security-enhancing initiative” that the US has long advocated. Although Pakistan says that it cannot “abandon” the pipeline project circumstances may so shape that it may have to opt for the second best options i. Japan and others who would view this as going against its nuclear non. A peaceful South Asia. hitherto a cauldron of poverty. assuage its acute security concerns and give it some space. Dawn. Moreover.proliferation policies. The province has seen political violence stemming from a strong sense of deprivation. Germany. also buy some gas besides earning royalties. it is going to be a boon for the region. Pakistan should urge both countries to exercise restraint in their words and deeds. India. Iran has the second largest gas reserves (after Russia) and needs to export energy resources to earn revenues. it the US should engage Iran.

The Shah Deniz field.24 IPRI Factfile II. and Turkmenistan is seeking to boost its natural gas output. The majority of the Caspian Sea region's natural gas reserves are located on the east side of the Caspian. 1998. with plans to become a net natural gas exporter in the near future. natural gas exports from the Caspian region have been hindered by geography. In October 1997. Unocal suspended construction plans for the pipeline due to the continuing civil war in Afghanistan and the U. Turkmenistan and Afghanistan agreed to reactivate the Centgas project. The pipeline was estimated to cost $2 billion. Pakistan. Afghanistan. Kazakhstan. as well as in Uzbekistan. to Pakistan via Afghanistan or Iran In July 1997. This distance from markets. the 1999 natural gas discovery of Azerbaijan's Shah Deniz field appears to have boosted the region's natural gas export prospects. now led by Saudi . multiple routes for Caspian region natural gas exports have been proposed. and Uzbekistan to build a Central Asia Gas pipeline to carry 0. and to ask the Centgas consortium. On August 22. In April 1999.. as well as the lack of infrastructure to deliver this natural gas to customers. Southeast.7 Tcf of natural gas per year via Afghanistan to Pakistan (and possibly on to India). which would run 900 miles from the Turkmen natural gas deposit at Dauletabad through Kandahar. . Unocal set up the Central Asian Gas Pipeline (Centgas) consortium to build the pipeline.. missile attacks on suspected terrorist training camps. Turkmenistan signed a memorandum of understanding with Afghanistan. already is being developed for export to Turkey. and terminate in the Pakistani city of Multan. has tempered interest in the Caspian region's natural gas potential. However. In addition. thought to be the largest natural gas discovery worldwide since 1978.S. However. Pakistan. in relatively remote Turkmenistan. Kazakhstan is beginning to tap its huge natural gas production potential. and in early August 1998. Russian natural gas giant Gazprom bowed out of the international consortium formed to build the pipeline. and the infrastructure that will be built to deliver this natural gas has helped to renew international interest in the region's natural gas. T URKMENISTAN -A FGHANISTAN -P AKISTAN (TAP) C ASPIAN S EA R EGION : N ATURAL G AS E XPORT O PTIONS Energy Information Administration In addition to problems related to the unresolved legal status of the Caspian Sea and several regional conflicts. in June 1998. Unocal announced that Centgas had not secured the financing necessary to begin the work. Although the infrastructure to deliver this natural gas to customers will be costly.

S.eia. the pipeline was considered effectively dead. Deputy Secretary of State Elizabeth Jones. Niyazov.gov/emeu/cabs/caspgase. the Argentinean oil company Bridas had won exploration rights in the Turkmen gas fields. As early as in 1992. which was close to the extremist outfit. Afghanistan and possibly India. as well as sanctions imposed by the U. this pipeline option has gained some support. but with a fragile peace in Afghanistan established and the Taliban removed from power.html> I NDIA AND THE T RANS -A FGHAN G AS PIPELINE India has decided to adopt a wait and watch approach to the ongoing negotiations that aim to revive the trans-Afghan gas Pipeline (TAP) project. and the United Nations on Afghanistan. However. the southeast pipeline option for Caspian natural gas exports remains a distant possibility < http://www. during a visit to Ashgabat in January 2002. Negotiations by these . U. However. In May 2002.doe. but continuing fighting in Afghanistan.S. continuing tensions between India and Pakistan make cooperation on a natural gas pipeline highly unlikely for the time being. Karzai. Turkmen President Saparmurat Niyazov and Afghan leader Hamid Karzai have expressed their support for the pipeline. the pipeline scene got murkier when in 1995 a consortium led by US-based oil giant UNOCAL and Saudi oil company Delta Oil started negotiating with the authorities in Turkmenistan for building contracts. this is not the first attempt at negotiating to build this 1600 kms. stated that the United States would support private companies that chose to undertake trans-Afghanistan pipeline projects if they were considered to be beneficial and commercially viable.S. In fact. .Gas Pipeline Projects in South Asia 25 Arabia's Delta Oil.5 billion gas pipeline project is expected to transfer of 30 billion cubic meters of natural gas annually from the Dauletabad fields in southeast Turkmenistan to Pakistan. but continuing instability in the region may deter potential investors. to proceed. and Uzbek President Islam Karimov is also on record advocating the pipeline. Until recently. kept the project on hold.long pipeline. This was also in the interests of the Pakistani establishment. and Pakistan President Pervez Musharraf held trilateral talks on the pipeline proposal. The proposed US$ 2.-led war on terrorism. the idea of a trans-Afghan pipeline has been revived. Since the Taliban government in Afghanistan was ousted in December 2001 as part of the U. Although the trans-Afghanistan pipeline could still be built to terminate in Pakistan rather than India. But the new power equations that came about in Afghanistan caused by the unexpected arrival of the Taliban forced Bridas to change its strategy and renegotiate the deal with the Taliban leadership.

The central government in Kabul does not have effective control in many regions of the country and the . The first phase of the feasibility study is over and the two subsequent phases are expected to take place soon. the safety of the pipeline cannot be taken for granted. India does not also want to be caught off guard in the event of an Indo-Pak conflict. governments in Turkmenistan and Pakistan and various warlords in Afghanistan went on till the Americans attacked Afghanistan and brought about a regime change. While India has never taken great interest in becoming a party to the trans-Afghan pipeline project. India has been asked to participate both as an investor and consumer. Though it is true that a large part of India’s future energy needs may be met by participating in this pipeline. The Asian Development Back (ADB) has been taking keen interest in the negotiations since the beginning and is involved in developing and processing the project. the international funding agencies may not be willing to make investments in the project if India’s participation is not guaranteed in it. With very low amount of hydrocarbon resources in its Strategic Energy Reserve. The ADB has also sanctioned one million dollar technical assistance grant to undertake a feasibility study for the project. India does not want to give any chance to Pakistan to jeopardize its energy security. In fact. Since Pakistan and Afghanistan are not sufficiently developed markets for Turkmen gas. India is the logical focal point of this pipeline venture although Pakistan’s minister of Petroleum and Natural resources says that the “project would be viable without India’s participation”. and Afghanistan may develop its own gas fields for domestic use. The most significant difference between the current negotiations and those went on prior to the fall of the Taliban is that this time the negotiating parties are countries themselves unlike last time when the Oil firms themselves were conducting the negotiations. India needs to carefully consider its options before taking any final decision about it.26 IPRI Factfile opposing camps with Taliban. What are India’s fears about participating in the trans-Afghan pipeline venture? Firstly. Indian government is apprehensive about the safe flow of gas to India through Pakistan. Secondly. Afghanistan and Turkmenistan was formed to oversee the project. the oil and gas ministers of Pakistan. after the Steering Committee of the project met in Manila on 9th April 2003. Moreover. The current negotiations to construct the pipeline began in May 2002 when a Steering Committee comprising of the oil and gas ministers of Pakistan. This time. it was always urged upon by the governments and private companies involved in the pipeline venture to participate in it. Afghanistan and Turkmenistan jointly requested India to participate in the pipeline venture. such a fear does not need much elaboration given the kind of relationship both the countries share. given the present political situation in Afghanistan.

through the Pakistani territory. First. Second.the TAP project. Al-Qaida and Pakistan.observerindia. in the proposed India-Iran pipeline there were three options to lay the pipeline i. as mentioned earlier. The final cost of the Project is estimated at between $2. Happymon Jacob <http://www. it may not be wise to jump into the TAP project however lucrative it might look at first sight. has threats from at least three quarters . . Though India meets more than half its energy needs by imports. Analysts also say that AlQaida elements may still be active in the regions the pipeline would pass through.htm> T URKMENISTAN -A FGHANISTAN -P AKISTAN N ATURAL G AS P IPELINE P ROJECT J UNE 2003 The Turkmenistan-Afghanistan-Pakistan Natural Gas Pipeline Project (the Project) is a gas pipeline of about 1.5 billion. The Project will take about three years to be implemented after all key decisions are taken by the cooperating countries. Third. whereas the Iran-India pipeline would have only one potential threat. which is Pakistan. Pakistan and possibly India. Not so long ago the Indian government had abandoned plans to construct a pipeline through Pakistan to transfer gas from Iran due to security reasons.com/analysis/A020. the TAP project. Iran was ready to reach gas to India by tankers in the event of any disruption in the flow of gas through Pakistan. This is not the case in the TAP project.the Afghan warlords.e.0 to $2.600 kilometers that will transport up to 30 billion cubic meters of natural gas annually from the Dauletabad fields in South East Turkmenistan to consumers in Afghanistan. there are even more reasons for India to be apprehensive about the trans-Afghan pipeline. On the other hand. in the Iran-India pipeline venture India had the option of saying that it will only pay for the gas reached safely at its doorstep and would not invest financially in the project. in the TAP project. through the shallow waters along the Pakistani maritime boundary or through the deep Arabian Sea water. It is wiser for India to wait and see what emerges from the high profile negotiations which are going on.Gas Pipeline Projects in South Asia 27 feuding warlords may see the pipeline as an opportunity to strengthen their hold in the area and to make some quick money. At least for three important reasons one would consider the abandoned Iran-Pakistan-India gas pipeline as qualitatively different from and thus better than . Moreover. which is to lay the pipeline through the insecure territories of Pakistan and Afghanistan. If the Indian government was apprehensive about the security of the proposed Iran-India pipeline. there is only one option.

They have established a Steering Committee of Ministers of oil and gas from the three countries for necessary follow up and supervision. the Steering Committee approved the report on the market study conducted for sale of Turkmen gas in Pakistan and Northern India. wherein a decision was taken to invite India to join the group. and on the risks and mitigation measures to be adopted to improve the Project's risk profile. The second meeting of the Steering Committee was held on 16 September 2002 in Kabul. ADB was requested by the Steering Committee. Pakistan and Turkmenistan met in Islamabad on 29-30 May 2002 to announce the formation of a coalition for implementing this Project. it will be a pioneering effort in linking the energy deficit economies of South Asia to the hydrocarbon rich Central Asian countries. Decisions were also taken on the project structure. At the third Steering Committee meeting held in Ashgabat.28 IPRI Factfile The Heads of State of Afghanistan. during its first meeting held in 9-10 July at Ashgabat. on the basis for pre-qualifying private sector companies interested in leadership of the pipeline consortium. The Steering Committee approved the TOR and agreed to consider the Framework Agreement at its next meeting in Ashgabat scheduled for 17-18 October 2002. At its Fifth Meeting held in Manila on 8-9 April 2003. The Fourth Meeting of the Steering Committee was held on 22 February 2003 at Islamabad. M/s Penspen of UK. At that meeting. the terms of reference (TOR) for the feasibility study was presented by ADB to the Steering Committee along with a draft of the Framework Agreement amongst participating countries. to play the role of a development partner and help with the feasibility study for the Project. The Committee also conveyed its "no-objection" to accepting a Technical Assistance from ADB for conducting the feasibility study on the pipeline. The sixth meeting of the Steering Committee will be held in Ashgabat during 19-20 June 2003. who have been appointed as the consultants for conducting the feasibilities under the ADB-funded TA. The Framework Agreement was subsequently signed by the Heads of State in Ashgabat on 27 December 2002. If successful. the Committee initialed the draft of the Framework Agreement (subject to confirmation by their respective Governments) for signing by the Heads of State at their next meeting. The Project has significant potential for enhancing stability and improving living standards in South and Central Asia. were introduced to the Steering Committee. The Committee also approved the pre-qualification documents and authorized ADB to commence the prequalification process. This has very long term and . The three Ministers signed a joint letter inviting India to join in the Project. ADB has committed to provide resources to undertake the full feasibility study and complete such a study by October 2003.

which is a primary mandate of the organization. would involve the construction of a pipeline about 1.700 kilometers in length." While Turkmenistan has yet to submit a certification of its Dawlatabad gas reserves. including TAP. However. which has financed a feasibility study for the project. First envisaged in 1991. off-again prospects of the Turkmenistan-Afghanistan-Pakistan Natural-Gas Pipeline Project (TAP) have come alive once more with a recent decision by India's cabinet to authorize discussion of three pipeline routes to India. a multitude of other problems could render the pipeline no more than a pipe dream.adb. But even if New Delhi and Islamabad come to a full agreement on the project. TAP was not deemed a profitable undertaking. We are confident that with necessary political will on part of participating countries. TAP is designed to transport natural gas from the Dawlatabad fields in Turkmenistan through Afghanistan into Pakistan and eventually to India. The Asian Development Bank (ADB). these risks can be seen as challenges that have to be faced to make the Project successful. and these are considerable.Gas Pipeline Projects in South Asia 29 widespread positive implications for these two regions. an unidentified ADB source quoted on 1 February by "Platts Energy Economist" said that the Turkmen side is expected to deliver the needed certification by March. excluding the pipeline's possible extension to India. security aspects and the investment climate in the region.5 billion and would require four years of construction after all decisions are taken by the cooperating countries and international financial institutions.asp> A NALYSIS : P IPELINES OR P IPE D REAMS ? The on-again. The initial phase of the project. has estimated that the Turkmenistan to Pakistan section of the pipeline would cost between $2 billion-$2.org/Documents/Articles/AFG/afg_2003001. Without the Indian market. ADB's role is that of an honest broker and an active development partner that helps to mobilize necessary technical and financial resources for the Project. ADB is fully cognizant of the risks attached to this Project. mostly through Afghan territory. these challenges will be addressed. According to a 14 February report by "International Oil Daily. and based on excellent relationship between ADB and each of the four countries. that can transport up to 20 billion cubic meters of natural gas annually." ADB officials have confirmed that the TAP pipeline is "economically and financially a viable project. The Project reflects the essence of ADB's approach towards Regional Cooperation. These risks pertain to the techno-economic viability of the Project. and Kabul's enthusiasm remains at current levels. . < http://www.

"We have the BangladeshBurma [Myanmar] pipeline. cutting through Kabul before entering Pakistan. but as a minister I am paid to dream. the pipeline . especially if the U. However. Beyond interim security. Currently there are two routes under discussion. we are looking at a pipeline from Iran that would cross Pakistan. and perhaps air patrols by Afghanistan's future military partners. told visiting Indian External Affairs Minister Kunwar Natwar Singh on 15 February that his country hopes New Delhi will look favorably at the trans-Afghan pipeline. several stumbling blocks need to be cleared. The Security Issue Afghanistan's security remains a major question. and we want a pipeline from Turkmenistan that would cross Afghanistan and Pakistan." Aiyar added. A press release from Karzai's office indicated that pipeline would bring "significant economic benefit to Afghanistan and the region. rendering the dream of riches for Kabul and peace and energy for New Delhi and Islamabad a mere pipe dream. Afghan President Hamid Karzai. the recent authorization given by Indian Prime Minister Manmohan Singh for his country to explore several possibilities to transport much-needed natural gas to India has rekindled interest in the TAP project. the second travels through western Afghanistan. If the route through western Afghanistan emerges as the best option.S.-led coalition forces and the NATO-led International Security Assistance Force (ISAF) begin to withdraw from that country." But before Karzai and his Indian and Pakistani partners begin to celebrate economic prosperity and a constructive new phase in the elusive New Delhi-Islamabad partnership. Unfortunately. passing through Kandahar into Pakistan. Indian Petroleum Minister Mani Shankar Aiyar told reporters in January that by looking at the region's map "you may accuse me of dreaming. which could be provided by Provincial Reconstruction Teams (PRTs) under ISAF command." "Platts Energy Economist" reported on 1 February.30 IPRI Factfile India's Geo-strategic Fears On the receiving end. India's reluctance to rely on gas from a pipeline crossing the territory of archrival Pakistan had proved to be a major stumbling block. Moscow could increase its leverage over a potential TAP participant. The first runs through northern Afghanistan. Should India cement its links to big state-owned players in Russia's energy industry. security concerns extend beyond Afghanistan. whose country is eager to get the TAP project under way. Kabul needs to extend its legal and physical authority throughout the pipeline route.

a little-known separatist group attacked a gas storage facility in Baluchistan. Fighting for similar gains on the Russian front. the pipeline would cross the North West Frontier Province (NWFP) of Pakistan. ask for higher royalties.is "unacceptable. But the Russian-Turkmen relationship has been showing signs of strain lately. As the "RFE/RL Central Asia Report" has noted. ." Russia's "Vremya novostei" reported on 14 February. Gazprom head Aleksei Miller met with Turkmen President Saparmurat Niyazov in Ashgabat on 10 February. Although Gazprom stated in a press release after the meeting that the two sides agreed to "follow existing agreements. Gazprom has its own concerns about Turkmenistan's gas reserves.Gas Pipeline Projects in South Asia 31 would cross Pakistan's Baluchistan Province. as local tribesmen increasingly are targeting natural gas facilities in the province to settle accounts with the central government. but their talks were inconclusive. These regions. or promote their nationalist agendas. Turkmenistan's Price Hikes Turkmenistan's relations with Russia are another variable in the complex equation that will determine the gas-rich Central Asian country's future deals. the Turkmen government's desire to force the renegotiation of an existing contract. A pipeline serving Indian interests would present them with a tempting target. which includes the semiautonomous tribal areas. most notably the tribal areas. Further talks are expected. are a cautionary lesson to other would-be partners. As "Nefte Compass" reported on 20 January.000 cubic meters. Turkmenistan strong-armed Ukraine into accepting a price hike.$44 per 1. Gazprom is waiting to see an audit of Turkmen gas reserves conducted by Texas-based DeGolyer and MacNoughton before investing in an upgrade of the Central Asia Center pipeline. Gazprom and Turkmenistan resolve the price dispute. In early January. Turkmenistan shut off gas shipments to Russia in January." Turkmenistan's official news agency stressed that the current price -. The attack was not unique. Both the NWFP and the adjoining Afghan border regions are also home to radical Islamists groups with very strong anti-India sentiments. In January. raising the price of gas from $44 per 1. If the alternative option is chosen. Moreover. Turkmenistan has signed a 25-year "gradual increase" contract with state-controlled Russian gas company Gazprom under which Russia's purchases of Turkmen gas will rise from roughly 7 billion cubic meters in 2005 to 70 billion-80 billion cubic meters by 2009. paid half in cash and half in kind -. However.000 cubic meters to $58. are known for their fierce independence. not to mention the hardball negotiating tactics implicit in the shutoff of gas shipments to Russia.

State-controlled Gazprom provides a steady stream of revenues to the Russian budget. may also be looking to expand its ties with the Russian energy sector.600 kilometer long pipeline that will originate from Daulatabad field in Turkmenistan will benefit Afghanistan in terms of transit revenue and meet growing energy needs of Pakistan. Amin Tarzi and Daniel Kimmage.rferl. chaired by Prime Minister Shaukat Aziz. decided to start work on the feasibility after submission of a certificate on the quantity of reserves at Daulatabad field that had remained one of the major hurdles in undertaking the project. A tripartite meeting. rendering the dream of riches for Kabul and peace and energy for New Delhi and Islamabad a mere pipe dream. and the Kremlin can be expected to safeguard its interests.BILLION D OLLARS G AS PIPELINE ON Pakistan. . Moscow could increase its leverage over a potential TAP participant." India.org/featuresarticle/2005/2/83E13251-DE33-4A99-896B810AAFE277FA. now drawing attention with its interest in TAP. T URKMENISTAN . which has contracted to buy large amounts of Turkmen gas to cover for declining yields at its existing fields against a backdrop of fearsome development costs for new fields in Siberia. might have disassociated itself from the project because it "was not supported by Russian authorities. Should India cement its links to big state-owned players in Russia's energy industry. Turkmen Oil and Gas Minister Amangelgi Pudakov assured the meeting to provide the verification certificate within a month. A FGHANISTAN A GREE M ULTI . Reuters reported.html> P AKISTAN . 18 February 2005 < http://www. The 1. Indian Petroleum Minister Mani Shankar Aiyar is expected in Moscow on 21 February for talks that will focus on a possible agreement between India's Oil and Natural Gas Corp.32 IPRI Factfile Gazprom. which at one point considered involvement in TAP. and specifically Gazprom. is likely to take a dim view of any alternate export routes for Turkmenistan. ONGC has also been conducting talks about the possibility of acquiring a stake in Yuganskneftegaz. Turkmenistan and Afghanistan on Wednesday agreed to pursue multi-billion dollars trans-national gas pipeline project after the Asian Development Bank (ADB) declared it feasible. An anonymous oilindustry source told RBC on 18 January that the Russian gas company Itera. (ONGC) and Gazprom to cooperate on natural-gas extraction projects in both Russia and India. the Yukos production asset state-owned Rosneft recently plucked from the ruins of erstwhile oil oligarch Mikhail Khodorkovskii's empire.

A team of Pakistani experts will visit the site shortly to conduct some technical and geological checks. The Minister told the reporters that Afghan authorities were clearing the landmines and there had been a lot of improvement in the security situation in the country.” Pakistani Petroleum Minister Amanullah Jadoon told reporters after the meeting also attended by Afghan Minister Engineer Mir Mohammad Saddiq.DE. interdependence and promote people to people contact which would help improve ties and strengthen regional cooperation.html> .de/southasia/pakistan/1. 13 March 2005 < http://www2. which initially showed reluctance to join over security concern.133266.Gas Pipeline Projects in South Asia 33 Pakistan insisted the project would be profitable only if it provided 3 billion cubic feet of gas supply every day. The petroleum ministers of the three countries were to meet in March but the meeting was postponed amid reports that the United States was exerting pressure on Pakistan and India to stay away from the project Pakistan. has denied any US pressure and said it will take a decision on the project in the country’s best economic interests. undersea gas from Qatar and Liquefied Natural Gas (LNG). allaying a major concern of the planners in the wake of the security situation in the war-torn Afghanistan. “The project will create linkages. DW-World. Experts observe the project could ultimately be extended to India as well where energy requirements are increasing by 27 percent annually.” Aziz said. Pakistan and Iran had recently agreed to speed up work on the gas pipeline project with the possibility of India also joining. “This is good news for all the three countries.1. Pakistan Also Pursing Other Options Prime Minister Aziz said Pakistan was also looking for various other options including overland gas supply from Iran. The ADB had financed the 1. Aziz said the project could be an important confidence building measure (CBM) between Pakistan and India. however.dw-world.3 million US dollars pre-feasibility report on the project. Security Concerns Saddiq assured to ensure the safety of the pipeline with the help of the donor agencies and the international community. The pipeline will travel nearly 500 kilometers through Afghanistan.

"The Afghan minister has given quite some surety and it appears to us. Turkmen and Afghan ministers met on Tuesday to discuss a multi-billion gas pipeline.htm > P ROTOCOL S IGNED TO C ONTINUE D ISCUSSIONS P AK S UPPORTS G AS PIPELINE : P RESIDENT Rawalpindi—President General Pervez Musharraf Wednesday expressed Pakistan’s support for Turkmenistan-Afghanistan-Pakistan gas pipeline project and said the country is open to all options with regard to its finalization. Pakistan's Petroleum Minister Amanullah Khan Jadoon said progress was being made in this direction.34 IPRI Factfile G AS P IPELINE T ALKS B EGIN ISLAMABAD. "It is our compulsion. it would improve considerably.com/2005/04/13/top9.dawn." he said. too. the one from Kandahar. because there are no mountains there. According to Turkmen estimates Daulatabad has reserves of 1. providing Kabul with transit revenue and Pakistan with much needed energy. as the minister said. He said Pakistan was under tremendous pressure to speed up pipeline projects to meet growing energy needs. with the southern Afghan province of Kandahar seen as the most suitable route for geographical reasons. but Pakistan wants to be sure about that. Among reasons for the delay have been worries about security in Afghanistan and questions over the size of the reserves in Turkmenistan's Daulatabad gas field. the size of Turkmen gas reserves and security in volatile Afghanistan." Jadoon told reporters after the ministers met in Islamabad. .3 billion 1. -Reuters Dawn. April 12: Pakistani. Afghan officials want India to join the project but Indian officials have shown only cautious interest. adding that the country had to work simultaneously on pipeline projects from Iran and Qatar. " he said." he said. "It is more feasible. Mr Jadoon said the Turkmen delegation presented some figures but had asked for another month to give a complete picture and Pakistani experts would visit the site to conduct some technical and geological checks. making it the world's fourth largest gas field.600-km pipeline running through Afghanistan to Pakistan. He said the route of the Turkmen pipeline had also been discussed. "They are clearing the land mines and.7 trillion cubic metres. that there is a lot of improvement in the situation over there. despite security problems. 13 April 2005 < http://www. The long-delayed project envisages a $3.

the Prime Minister said. interdependence and promote people to people contact which would result in long lasting ties and strengthen regional cooperation. is very keen to diversify its energy sources to ensure fuel for future growth which will benefit both industrial as well as individual consumers. Amangeldi Pudakov said that his government is very keen to provide gas to its southern neighbors and described this pipeline of great significance. Meanwhile Prime Minister Shaukat Aziz said that the TurkmenistanAfghanistan-Pakistan (TAP) pipeline will be a tremendous initiative to promote economic.Gas Pipeline Projects in South Asia 35 He told a tripartite delegation of Turkmenistan-Afghanistan-Pakistan gas pipeline project that the country favours transportation of gas under the project. Mir Mohammad Saddiq and Asian Development Bank Energy Specialist Dan Millson who called on him at the Prime Minister’s Secretariat on Wednesday. diplomatic and political coordination between these countries. Eng Mir Mohammad Sadiq. The delegation briefed the President about the ADB-assisted feasibility of the pipeline project. The Prime Minister stated this during a meeting with Turkmenistan Minister of Oil & Gas Industry and Natural Resources. The meeting also included representatives of Asian Development Bank who have done the pre-feasibility of the project and the Prime Minister appreciated their role in structuring this very important project. saying the three countries had productive discussions on the project. The Prime Minister said that the trilateral meeting is significant because Pakistan’s economic growth needs increased energy sources and it is looking for various options including overland gas supply from Iran and Turkmenistan. Pakistan. he said. Amangelgi Pudakov. They updated the President about the progress in deliberations on the project. Minister of Mines and Industry. Asian Development Bank’s Mr Dan Millison was also present. Foreign Minister Khurshid M Kasuri. Afghanistan Minister of Mines and Industry Engr. Engineer Muhammad Sadiq. Afghan Minister for Mine and Industries. The delegates included Turkmen Minister of oil and gas industry Amangedi Pudakov. Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon and senior officials also attended the meeting. Afghanistan said that his country would provide a safe corridor for the . He said it will create linkages. The President said the project will benefit all three countries. undersea gas from Qatar and liquefied Natural Gas (LNG). “We will import gas to fulfill energy requirements for our fastgrowing economy in both agricultural and industrial sectors”.

Afghanistan.G. Eng. Responding to a question about the detailed report on the gas reserves. Replying to a query. He said a preliminary audit report on the gas reserves at Daulatabad has also been compiled and laid down in the meeting while the detailed report would be available in a month time. Amanullah Jadoon said the feasibility study on the proposed 1. Mir Mohammad Saddiq said his country has taken all steps for the safety and security of the pipeline and he himself is involved to ensure the safety and security of the pipeline. Pudakov said “We have hired consultants who have given preliminary report while the detailed report will be finalized in one month. he said “A lot of progress has been made on the TAP project but we would keep our option open to finalize one of the three gas pipeline projects. He said work on the TAP pipeline project could be started by end of this year.000 national army and national police force. Amanullah Khan Jadoon said on Wednesday that Pakistan would keep its options open for other regional gas pipeline projects. The study was funded by the Manila-based Asian Development Bank. “The security situation is satisfactory in our country as we have 60. The three ministers also signed a protocol to continue discussions on the proposed . he said the tripartite meeting discussed the Daulatabad-Chaman-Multan route which could be changed on the recommendations of investors. however. Gas Industry and Mineral Resources A. Turkmen Minister of Oil. The Minister said at present. our requirements are about 2-3 billion cubic feet per day. In his remarks Minister for Mines Afghanistan.” About route of the pipeline project. he added. He said additional security forces have also been recruited for providing security to various project going on in Afghanistan.36 IPRI Factfile project and informed the Prime Minister that President Hamid Karzai is fully committed to the success of this project. he said “We would not object if India wants to join the TAP project. said that gas at the Daulatabad gas field will be sufficient for Pakistan’s requirements for next 30 years.3 billion Turkmenistan-Afghanistan-Pakistan (TAP) Gas Pipeline Project as viable and feasible. Earlier Terming $3. he assured would extend all possible assistance to make this project a success. Minister for Petroleum and Natural Resources. Pudakov were also present.” He.” he added. Addressing a press conference here at the end of two-day TAP Steering Committee.G.480kilometer pipeline completed in June last year was discussed in the meeting. Mir Mohammad Siddiq and Turkmen Minister of Oil. Gas Industry and Mineral Resources A.” Minister for Mines and Industry of Afghanistan Eng.

increased Afghan stability. 14 April 2005 < http://pakobserver. Taliban attacks in the south appeared to be on the increase. were more attractive. APP Pakistan Observer.asp > A FGHAN 'P IPE D REAM ' D RAWS C LOSER TO R EALITY A P ROPOSED G AS P IPELINE FROM T URKMENISTAN TO A RABIAN S EA COULD B OOST J OBS . Only security of the pipeline is left. it helps to provide a market for its substantial gas reserves. on paper. Afghanistan. For Turkmenistan. and higher energy prices for Turkmenistan have made the pipeline increasingly feasible. Mir Sediq was an engineer for Unocal. is the closest thing to a win-win scenario as one can find in Central Asia. Driven by a Pakistani economy growing at nearly 7 percent a year and higher energy prices. And for Afghanistan. This week.net/200504/14/news/topstories07. In midApril. AFGHANISTAN – Back in the days of the Taliban. and he's confident that the pipeline is coming close to reality." says Sediq. and the government of Afghanistan is capable of providing security. and other sources of energy. expected to run out of its own reserves in five years. mining. the pipeline will help sustain growth. In the rough parlance of oil industry executives. it could mean from $200 million to $350 million per year in transit fees. the three countries and the Asia Development Bank held their eighth round of meetings to hammer out details of what Turkmenistan has. Mr. but talks between Turkmenistan. and Pakistan are proceeding. such as Iran or Qatar. Today. "The foreign investment rate of return is 17.Gas Pipeline Projects in South Asia 37 pipeline project. President Hamid Karzai told donor countries the project was a top priority on a par with the war on terror and opium eradication. As yet. and industrial sector. there are no foreign investors vying for the project. They also agreed to hold 9th TAP Steering Committee meeting in Ashakabad. that beats a kick in the head. based on the assumptions that the gas reserves in Turkmenistan are enough and the consumption rate in Pakistan remains high. Turkmenistan in July this year. But growing Pakistani demand. Sediq is minister for Afghanistan's energy. working on a pipe dream: bringing natural gas from Turkmenistan down through Afghanistan to Pakistani ports on the Arabian Sea. how . For Pakistan. and we would like to keep Afghanistan a place that is open and attractive for foreign investment.5 percent. I NVESTMENT KABUL." It wasn't so long ago that the pipeline was thought to be dead. "This pipeline is an opportunity for Afghanistan. the pipeline.

html> P AKISTAN A ND T URKMENISTAN P USHES W ITH G AS P IPELINE ISLAMABAD 16TH May. There are lots of pipelines in countries where there is war. which will comprise American UNOCAL. but not a deal breaker. in competition with neighbouring Iran and India. which has been delayed since 1998 by unrest in Afghanistan. but Sediq is expected to travel to the Turkmen capital of Ashkabad Friday to see if the government's survey of reserves will be finished in time. The proposed 1. an adviser to the Afghan Ministry of Mines and Industry.com/2005/0513/p05s01-wosc. but if the price is five times higher than getting gas from Qatar. [Y]ou can have all the security you want.as the "natural" transit route for the transit of Turkmenistan and other Central Asian energy reach nations to world outlets. the project that has the backing of Washington would constitute another big disappointment for the Islamic Republic of Iran that considers itself -.9 billion for the segment to Pakistan and an additional US$600 million for the extension to India Approximately 750 kilometres of the pipeline will cross Afghanistan. General Mosharraf's visit to Turkmenistan was the first to a Central Asian nation since he took over in a military coup in 1998 [October 1999] and points to Islam-Abad's efforts to play a more active role in the region. The next round comes in July. "We need to know if there is enough gas for the next 30 years. Both countries attach great importance to early completion of this project. Pakistan. Estimated cost of the project is US$1.and rightly though -. If approved. so security is a question. then the deal is broken. and whether Afghanistan is safe enough." says Mary Louise Vittelli. "The biggest question is certification of gas reserves in Turkmenistan.38 IPRI Factfile much gas Pakistan needs. (IPS) The two billion-dollar Trans-Afghanistan gas pipeline project dominated two days of discussions between Pakistan's Chief Executive General Parviz Mosharraf and the Turkemen President Saparmurat Niyazov." Scott Baldauf. with a 640 kilometres extension to India under consideration.csmonitor. analysts says. Pakistani diplomats said. 48-inches diameter natural gas pipeline that would carry up to two billion cubic feet per day (20 billion cubic meters per years) stretches from the Turkmenistan-Afghanistan border in south-eastern Turkmenistan to Multan. 13 May 2005 <http://www. Delta of Saudi . Turkmenistan government.464 kilometres. Turkmenistan had signed the deal with a consortium.

Itochu of Japan. he added. Iran Press Service.com/articles/pakistan_turkemenistan_16500. "We have geo-economic and geo-strategic linkages with Turkmenistan". said Moscow-based analyst Andrei Piontkovsky. regional and international issues with special emphasis on Afghanistan and Kashmir. sources said. He said Pakistan was looking to promote relations with Turkmenistan in diplomatic. pointing out to the Russian new President's forthcoming visit to Eshghabad.Gas Pipeline Projects in South Asia 39 Arabia. Meeting with newsmen after his first round of talks with Turkmen President. "We want peace between Pakistan and India and peace in Afghanistan and we believe in peace with honour and dignity".iran-press-service. Analysts said Niyazov wants to balance the different powers in the region. 16 May 2005 <http://www.htm> . INPEX of Japan. the Pakistani strongman hold and President Saparmurat Niyazov exchanged views on important bilateral. "He wants to remind Putin that he is independent politically". General Mosharraf's visit is closely watched by Iran. Hyundai of South Korea and Crescent of Pakistan. Gazprom of Russia. as the country that has close economic and political ties with Turkmenistan after Russia. economic cultural relationship and in all the fields including the defence field. During their meetings. General Mosharraf declared we believe in peace and would like to have peace in the region.

The sources said the Iranian side was convinced about the suggestion and agreed to move forward on both the options simultaneously. Pakistan also suggests that the two countries should start working side by side on Iran-to-Pakistan and Iran-to-India through Pakistan gas pipeline so that if Indian option is delayed the Iran-to-Pakistan pipeline option is not left out in the cold. The two sides agreed that India was unnecessarily avoiding the project despite the fact that it was energy-deficit and was purchasing LNG at much higher economic cost. These options were discussed here on Wednesday at a meeting between oil and gas ministers of Iran and Pakistan. the sources added. sources said." said the statement. IRAN-PAKISTAN-INDIA GAS PIPELINE P AKISTAN P ROPOSES S EPARATE P ROJECT : G AS P IPELINE ISLAMABAD. Iranian Oil Minister Bijan Namdar Zangeneh led a six-member delegation at the meeting while the Pakistani side was headed by Petroleum and Natural Resources Minister Amanullah Khan Jadoon. The Iranian delegation that was here on a day-long visit left in the evening for New Delhi to discuss Indian participation in the gas pipeline project. . both the sides agreed to take steps to initiate (the project) without further delay as Iran wants a market for its gas and Pakistan needs to meet its shortfall in the coming years. "During the meeting. Jan 5: Islamabad has told Tehran that Iran-to-Pakistan gas pipeline should be pursued as a stand-alone and independent project in case India is not ready to join it. Sources privy to the meeting told Dawn that Pakistan informed the Iranian side that Iran-to-Pakistan gas pipeline project had become very attractive in the light of fresh studies conducted by Islamabad about the country's gas demand. Iran has agreed to the proposal but has expressed its desire to give India a chance to join the project to ensure a bigger market and reduce overall cost of the project. An official statement said the meeting discussed bilateral issues to enhance cooperation between the two countries with specific reference to export of Iranian gas to Pakistan. it is learnt.40 IPRI Factfile III. The studies suggest that Pakistan's gas shortfall will start from 400mmcfd (million cubic feet of gas per day) by 2010 and increase to about 4bcfd (billion cubic feet of gas per day) by 2025 because country's economy was poised to grow at a rate of seven per cent by the end of the current fiscal year.

" said the prime minister who arrived here on a three-day visit to boost ties and discuss a proposed Iran-Pakistan-India gas pipeline project. "This development will build a very good atmosphere for improvement of relations among all the region's countries. Referring to Pakistan's growing economy. Dawn. . Iran has indicated a price at the Pakistan border at $2 per mmbtu which Pakistan understands could be negotiated to a reasonable level.htm/> G AS P IPELINE D IPLOMACY TO P ROMOTE P EACE : A ZIZ TEHRAN. we hope that this significant project will be operational as soon as possible. he said: "In order for us to ensure such a fast and constant growth. Iran has also offered to enter into some formal agreement with Pakistan to sell specific quantities of gas.com/2005/01/06/ebr1.Gas Pipeline Projects in South Asia 41 The Pakistan side also reiterated its full support and foolproof security arrangement as earlier announced by President Pervez Musharraf in case India joins the project. Iran will bring its gas to the Pakistan-Iran border from where Pakistan will lay its own pipeline to its load centres. Feb 22: Prime Minister Shaukat Aziz said here on Tuesday that 'pipeline diplomacy' would bring peace to the region. 6 January 2005 <http://www.com/2005/02/23/top4. "Fortunately with the agreement of the Indian government. the state news agency IRNA reported. The positive points of this project are that there are no transit countries in this project that can be completed through bilateral agreements and both the countries have the capability to construct the pipeline in their own countries. Mr Aziz also expressed happiness over India's agreement to join the pipeline plan.dawn." -AFP Dawn. 23 February 2005 < http://www.htm > I RANIAN M INISTER I NVITED TO D ISCUSS P IPELINE P ROJECT : S AARC E NERGY M INISTERS ' C ONFERENCE ISLAMABAD. Under the Iran-to-Pakistan project.dawn. Feb 28: Pakistan has invited Iranian Petroleum Minister Bijan Namdar Zanganeh to start tri-lateral negotiations on Iran-Pakistan-India gas pipeline project on the sidelines of Saarc energy minister's conference next month." he said. we need a reliable source for energy supply.

He said Turkmenistan has also sought a date for holding a meeting on Turkmenistan-Afghanistan-Pakistan gas pipeline and hopefully the TAP steering committee would meet sometime in April. "The Indian government's recent approval of the gas pipeline has created an encouraging atmosphere for pushing ahead this highly important project. Petroleum Minister Amanullah Khan Jadoon told newsmen. Speaking at a news conference. Dawn. Qatar and Iran for gas imports and decision would be made on the basis of lowest gas delivery price in Pakistan.htm> O IL N EEDS C HANGE S TRATEGIC F ACE OF A SIA Washington. 3 (UPI) -. Responding to a question. French and Indian companies could join together to form a consortium for the project. He said Iranian oil minister has also been invited to take advantage of the occasion and hold tri-lateral discussions.The relentless demands of the world energy market have brought three major nations of Southern and Southwest Asia into a new partnership that crosses and obliterates old rivalries and tensions. Sources said no such a big pipeline project in the world has ever been completed without the involvement of the US. 21.42 IPRI Factfile The two-day conference of the South Asian Association for Regional Cooperation will be held on March 17 and 18 in Islamabad to promote regional cooperation in the fields of oil and gas. However. 1 March 2005 < http://www. Mr Jadoon said Pakistan was currently in negotiations stage for the implementation of the project with all the parties and at the same time it was also looking into the import of Liquefied Natural Gas. other sources said it was yet to be seen whether Russian. Mar. which no doubt would have a positive impact on regional .dawn. the minister said Indian Oil Minister Mani Shankar Aiyar would also be attending the conference and the two sides were expected to discuss the multi-billion dollar project on the sidelines of energy minister's conference. Iranian Foreign Minister Kamal Kharrazi announced that India was considering joining a proposed gas pipeline project stretching from Iran to India through Pakistan. Secretary petroleum ministry Ahmad Waqar said Pakistan was simultaneously holding discussions with Turkmenistan.com/2005/03/01/top5. DC. On Feb. He did not agree that US sanctions against Iran could make gas import from Iran impossible and said the project could be implemented without US involvement because US sanctions did not mean UN sanctions. the UK or Japanese companies.

For Iran has already singed an enormous $70 billion oil and natural gas deal with [China] last October that locked both countries into a 30-year relationship. .Gas Pipeline Projects in South Asia 43 convergence. But if the project goes through." According to Aiyar. Pakistan appears eager to play ball with the project." "The Iran-Pakistan-India pipeline would be the best and most desirable step towards enhancing the cooperation between Iran and India in the field of energy. it will have far-reaching geo-strategic implications for all three countries. India agreed to participate in developing Iran's oil fields and extracting some 100.5 million tons of liquefied natural gas.000 barrels of oil per day from them. In return." Kharrazi's comments followed the signing of a far reaching energy agreement between the two countries in January 2005 whereby Iran agreed to sell India 7. and 472 miles of it would cross Pakistan. And he said that Pakistan had little concern over the liquefied natural gas deal between Iran and India. Kharrazi in his Feb. a strong supporter of boosting energy links with Iran. or LNG. a year for 25 years. Pakistan's Petroleum and Natural Resources Minister Mir Naseer Mengal has announced that Pakistan was eager to begin constructing the proposed Iran-Pakistan gas pipeline project." Kharrazi said. while the second would be between Iran and Pakistan on how the gas is to be transported to the Indian border. Iran would not enter into any agreement with Pakistan and it is the responsibility of Iran to negotiate with Pakistan on the pipeline's construction and ensure the safety of supplies on Pakistan's territory. Mengal said: "Whether or not India joins the project. Mani Shankar Aiyar. India may agree on laying the pipeline from Iran via Pakistan up to India's territory. Pakistan will continue efforts for its realization." India's Petroleum Minister. Aiyar said: "There will be two sets of bilateral agreements.000 barrels of crude oil a day to China for the next 25 years at market prices from its giant Yadavaran field. the creation of new job opportunities. hopes that agreement on the gas pipeline deal will be finalized when he visits Tehran in June. Iran will enter into a pact with India for delivery of natural gas at Indian borders. stating.724 miles across southwest Asia. 21 speech described that deal as "one of the most significant results of the strategic agreements reached by the two countries so far. "The lower cost of the piped gas." According to Mengal. and the acceleration of economic progress and foreign investment in the countries of the region are some of the main motivations for implementing such a large project. "Laying the Iran-Pakistan-India gas pipeline would be the best and most desirable step towards enhancing cooperation between Iran and India in the field of energy. In the first one. "It (the deal) has nothing to do with the proposed gas line project. Iran is committed to supply 150. Under that deal." the Iranian foreign minister said. The pipeline would extend 1.

He has long been a proponent of reviving and transforming the old NonAligned Movement ideals of the 1955 Bandung Conference in Indonesia to bring together India and China in a new partnership to lead Asia in the 21st century. as a potential ally against the Muslim Middle East should be discarded. Nor was the Indian deal with Iran done behind China's back. let alone Japan. But there is no doubt that Aiyar is seriously committed to the idea. For both nations are now seeking to harmonize their ravenous thirst for Middle East -.-Iranian situation.. 3 March 2005 <http://washtimes. especially from Iran now looks certain to set limits on the degree to which it is prepared to cooperate with the United States against the major Muslim oil-producing nations of the Middle East. let alone against China.com/upi-breaking/20050303-112309-2253r. as well as from eight nations in the Organization of Petroleum Exporting Countries to try and create a new "Organization for Oil Importing Countries. In any case. Iran is sending clear signals that the country continues to want to do business with India as well as China regardless of the current global political pressure. India's crucial need for Middle East oil.S.htm> ." It remains to be seen if such an organization can be created. And having the friendship and energy dependence of China and India will clearly be a crucial counterweight to the current U. Not all the high tech capabilities to a tiny country of 6 million people will weigh in the scales against the energy needs of two enormous energy dependent nations seeking the fuel to provide for more than a billion inhabitants each for decades to come. 6. or at least reduced to more realistic ambitions. in India's case. Aiyar played host to an "energy summit" of petroleum ministers from China.44 IPRI Factfile The emerging natural gas deal with India does not appear -. or whether even if it can. But it serves notice that Iran is eager to seek lucrative energy deals with both the emerging potential superpowers of mainland Asia. On Jan. Washington Times.of oil and gas to avoid a potentially dangerous energy rivalry getting out of control.as yet -to be remotely on the same scale. Also. And the eagerness of India and China to buy Iran's oil and gas also serves notice to Israel that its dreams of courting both Asian giants as an equal partner and. whether it will be able to defuse and harmonize the ever more ravenous energy needs of India and China.and other sources -. South Korea and Japan.

Aiyar said. but Aiyar's suggestion that the deal could fall through comes at the same time that U. RFE/RL reported.S. preferring instead to deliver "lean" gas that does not contain butane. security concerns and Indian anger over Iranian business practices are putting this in doubt. in which Iran must deliver gas to the Indian border or pay for the contracted quantity. India reportedly prefers a "supply-or-pay" contract. Aiyar explained that Iran wants to charge as much for natural gas as it does for LNG (about $4 per million British thermal unit [MBTU]). however. On 16 March.Gas Pipeline Projects in South Asia 45 A NALYSIS : I RAN -P AKISTAN -I NDIA G AS P IPELINE I MPERILED As the owner of the world's second-largest proven natural gas reserves. or propane." 7 March 2005)." Press Trust of India reported him as saying. India-Pakistan tensions over Kashmir and related security concerns have delayed the project. and India would buy 7.700 kilometers long. Press Trust of India reported on 9 March. and Iranian Foreign Minister Kamal Kharrazi said the pipeline would be 2. In fact. Tehran also rejected India's request for natural gas that is rich in petrochemicals. Secretary of State Condoleezza Rice is visiting India and Pakistan.S. With the addition of transportation and transit charges to the Iranian price. in which India must pay for the agreed amount of gas even if it does not take delivery of it.are unwilling to pay more than $3 per MBTU. "We will not buy gas from Iran if we cannot sell it in India.50 per MBTU. but U. A recent flurry of diplomatic visits suggested that the deal was about to be concluded. In late-February and earlyMarch diplomats from all three countries said a deal would be signed soon. is insisting on a "take-or-pay" agreement. It is therefore pursuing gas export deals with a number of countries. and Iran should offer a special price for such a large order. Tehran. she referred to the proposed pipeline during a 16 March press conference in New Delhi. She said. Iran is keen to exploit this resource as a source of revenue. furthermore.the fertilizer and power sectors -. I think our . One of the biggest potential customers so far is India. Iran and India signed an agreement for an overland natural gas pipeline in 1993. It could be a coincidence. and in 2002 Iran and Pakistan signed an agreement on a feasibility study for such a pipeline.5 million tons of LNG [liquefied natural gas] a year for 25 years (see "RFE/RL Iran Report. Aiyar added that India and Pakistan will need approximately 200 million standard cubic meters of gas daily. "We have communicated to the Indian government our concerns about gas pipeline cooperation between Iran and India. Indian Petroleum Minister Mani Shankar Aiyar announced that his country might withdraw from the gas deal. whereas the main Indian consumers -. ethane. and negotiations for a pipeline stretching across Pakistan have been going on since the mid-1990s. the gas would end up costing $4.

Ltd (GAIL) -. India's Other Suppliers India is a huge and growing natural-gas market." 25 February 2005). and Burmese officials have indicated an interest in running a pipeline to West Bengal in India. India's cabinet recently authorized discussion of the Turkmenistan-Afghanistan-Pakistan Natural-Gas Pipeline Project (see "RFE/RL Afghanistan Report. and Unocal -. One idea is to connect Bangladesh's natural gas reserves with the Indian gas grid.5 billion cubic meters of natural gas in 2002.including Bechtel. And Iran's Other Markets Iran natural-gas reserves is an estimated 26. Iranian Petroleum Minister Bijan Namdar-Zanganeh and Omani Oil and Gas Minister Muhammad bin Hamad bin Sayf al-Rumhi on 15 March signed an agreement on the export to Oman .46 IPRI Factfile ambassador has made statements in that regard and so those concerns are well known to the Indian government. have a stranglehold on the Indian market.is another competitor for the Indian market. but the country only produced about 76. therefore. "The Financial Express" reported on 12 March. and deliveries began in January 2004.3 billion cubic meters per year of LNG. According to the Energy Information Administration. He also said India could invest $25 billion in the entire Russian energy sector. Most of that gas was used domestically. Qatar --with the world's third-largest natural-gas reserves (14. although Iran did export to Armenia and Turkey.own equity in Burmese natural gas reserves." The timing of the Indian petroleum minister's comments suggest that New Delhi is pressuring Tehran for a better deal. too. Total. Burma could be a source of natural gas. according to the Energy Information Administration. but it is looking to other countries to fulfill its requirements. natural gas use was nearly 25 billion cubic meters in 2002 and is projected to reach 34 billion cubic meters in 2010 and 45. Gaz de France. General Electric. Two Indian companies -. Iran does not. Iran is eager to reach other markets.4 trillion cubic meters) -.3 billion cubic meters in 2015.6 trillion cubic meters. and it could be taking advantage of Rice's visit to leverage its position.Oil and Natural Gas Corporation (ONGC) and Erstwhile Gas Authority of India. Indian Petroleum Minister Aiyar visited Moscow and Kazakhstan in late February to discuss energy issues. India produces gas and has worked with outside partners -. He reportedly said that India is willing to pay $2 billion for a 15 percent stake in Yuganskneftegaz. India's Petronet and Qatar's Ras Laffan LNG Company (Rasgas) signed an agreement for the provision of 10.to increase production. according to the Energy Information Administration.

China. Bulgaria. IRNA reported. Other countries that have signed gas-related memoranda or at least discussed the topic with Iran include Austria. 18 March 2005 <http://www. But Tehran's pricing policies and Washington's opposition may scuttle this effort to breakout." He earned his Ph. and Turkey.html> US S ECRETARY OF S TATE P RESSES I NDIA AND P AKISTAN TO A BANDON I RANIAN G AS P IPELINE During her first trip to South Asia as US secretary of state in mid-March. Iran likes to present every meeting as a major accomplishment by staging the signing of a memorandum of understanding. at the University of Cambridge. it cuts across the Bush administration’s aggressive campaign of economic isolation and military threats against Tehran.rferl. Conclusion of the deal with India is potentially very important for Iran. Italy. At a joint press conference. While the project promises significant benefits for both countries. He went on to say that the legal documents relating to the deal will be drawn up in a few months. Indian Foreign Minister Kunwar Natwar Singh praised . beginning in 2006. Bill Samii. but these are not binding contracts.Gas Pipeline Projects in South Asia 47 of 10 billion cubic meters of natural gas annually. Rice’s visit to the two American allies was of course cordial. Two pipeline routes are being considered -. Zanganeh said the deal with Kuwait is worth more than $7 billion over 25 years." He has contributed to several books about the Middle East. beginning in late 2007. because it will curtail some of its political isolation and will earn it a place in the international gas market. one of Condoleezza Rice’s top priorities was to pressure India and Pakistan to abandon plans for a major gas pipeline from Iran. IRNA reported.D. Earlier in March the possibility of Ukraine purchasing 15 billion cubic meters of natural gas from Iran every year was discussed at an IranUkraine energy commission meeting in Kyiv. The same day." and the "Middle East Review of International Affairs (MERIA) Journal.Iran-Armenia-Georgia-Russia-Ukraine or Iran-ArmeniaGeorgia-Black Sea-Ukraine.org/featuresarticle/2005/3/D107F257-10BC-4B2A-83E7BB87C3533EA5." "Middle East Policy. Bill Samii is a regional analysis coordinator with RFE/RL Online and editor of the "RFE/RL Iran Report. Greece. Zanganeh and Kuwaiti Energy and Oil Minister Ahmad Fahd al-Ahmad al-Sabah signed a deal for the export to Kuwait of 10 million cubic meters of natural gas a day. His research articles have appeared in the "Middle East Journal.

She also held out the prospect that the US would sell sophisticated F-16 fighters to India. . which provides for sanctions on countries investing more than $US20 million in Iran’s energy sector. So we not only expressed our concerns to India but also told Japan to stop [a] gas project with Iran. Rice played down Washington’s chief accusation against Iran: namely that it is developing nuclear weapons. Washington’s opposition to the Iranian pipeline poses a political dilemma for New Delhi.com web site: “We have certain issues with Iran because that country is involved in terrorism. which includes providing nuclear reactors for civilian purposes. The use of the term “global” acknowledged the ambitions of India’s ruling elites for a greater role in international affairs. Mani Shankar Aiyar to express US “concern” over the pipeline project.” Significantly. one imagines the exchanges were somewhat blunter. Rice responded in kind.48 IPRI Factfile Rice for her political vision and spoke of the potential for US-India relations to “shape our global future to our mutual advantage”. as well as to Pakistan. met with Indian petroleum minister. Rice held out the possibility that the US might lift the ban on nuclear cooperation with India imposed in 1974 if New Delhi abandoned the Iranian gas pipeline project. The US secretary of state said Washington would take the next step in developing the Indo-US strategic partnership. “[We] believe broad energy dialogue should be launched with India because the needs are there. the Bush administration’s demand cuts directly across India’s relations with Iran and more broadly its own ambitions in the Middle East and Central Asia. The double standards are all too obvious: while the Bush administration is demanding UN sanctions against Tehran over unproven allegations that it is seeking a nuclear bomb. and the figure is projected to rise. the US ambassador in New Delhi. the US has eased economic restrictions on India. David Mulford. has been interfering in the affairs of its neighbours and is also facing UN sanctions.” She told the Indian-based rediff. In preparation for the visit. He hinted that India could face US economic retaliation under the 1996 Iran-Libya Sanctions Act. While close military and economic relations with the US bring benefits. While in India. Behind the scenes. In fact.” Rice declared. defence and economic ties. which has produced and tested a nuclear device. but increasingly global responsibilities. India currently must import 70 percent of its oil. Rice emphasised that the US has “communicated to the Indian government [its] concern about gas pipeline cooperation between Iran and India. declaring that the US and India not only had regional. US president George Bush announced a year ago that Washington would consider assisting India in constructing nuclear power plants.

Publicly. Iran. including Russia. Standing alongside Rice at their joint press conference.. having an impact. we have a very important requirement of energy without which we cannot hope to sustain priorities. then the pipeline grid could eventually stretch from the Caspian Sea to China. Negotiations are stalled at present. Speaking in Moscow last year.. who are concerned not just about the pipeline. such as the high price of Iranian gas and the endemic security problem of laying the pipe through lessthan-reliable Pakistan. but Turkmenistan and Burma as well. [A]ll friendly countries in the world must recognise that even if they have national concerns.” India’s oil minister Mani Shankar Aiyar told the media: “[T]his relationship [with Iran] can’t be compromised for any third party concern. Earlier this month the Indian cabinet discussed bringing gas not only from Iran. but both New Delhi and Islamabad are looking to the potentially large economic rewards that a gas pipeline from Iran through Pakistan to India would bring. and so the pipeline is important.” US pressure is.. That is unlikely to enthuse the Bush administration. Indian foreign minister Singh pointedly remarked: “We have no problems of any kind with Iran. [I]f Mani Shankar Aiyar’s plans come to fruition. New Delhi is exploring closer strategic relations with China and Russia in particular. its bellicose policy towards Iran is directly undermining the prospects for a negotiated settlement on the Indian subcontinent.” The Times of India cautiously noted that the “Iran pipeline represents a diametrically opposite path to US foreign policy. however. We need a lot of new additions to our sources of energy... While Washington has pressed for the talks.. citing “a number of reasons for the shift. An article on the Asia Times web site suggested that India is considering backing out of the pipeline deal. Aiyar praised India’s relations with the former . India’s Oil and Natural Gas Corporation has already invested around $5 billion over the past four years in a number of countries. Vietnam and Burma. including China and Korea.” Last month Aiyar floated the idea of an ambitious Asian gas grid linking suppliers in the Middle East with Asian gas users.” Concerns about US Ties Washington’s stance also provoked opposition among layers of India’s ruling elite. but the dangers of a close alliance with the US and the Bush administration in particular. In tandem with developing economic cooperation. The Hindu bluntly declared that India and Iran “do not need the benediction of the US to do business with each other. which wants to play a dominant role in the region.Gas Pipeline Projects in South Asia 49 The US stance also undermines a key economic motivation behind Indo-Pakistan talks to resolve longstanding conflicts between the two countries. among others. India rebuffed the US demand.

as well the Juifer oilfield. by trade or otherwise. This month. Putin declared that the three countries “would make a great contribution to global security. which is determined to establish its own stranglehold over the strategic. this will be one of the most significant confidence-building measures undertaken by India and Pakistan in the context of the ongoing process to normalize relations. Credit goes to the Indian leadership for the decision to go-ahead despite external pressures and to the Pakistani government for pursuing the project consistently. Pressure on Pakistan Rice spelt out the same message in Islamabad. India is collaborating with China in the development of Iran’s largest off shore oil field.org/articles/2005/mar2005/rice-m31. The abandonment of the gas pipeline would. Ratnayake. resource-rich regions of the Middle East and Central Asia.shtml> P ROGRESS ON G AS P IPELINE INDIA’S insistence on pursuing the option of importing gas from Iran overland through Pakistan despite American reservations is encouraging. it accepted Pakistan’s proposal for a gas pipeline from Iran as part of an energy corridor for the region. Since the idea of a tripartite project was mooted initially in 1994.” Visiting India in December. In March. “Russia has guaranteed our territorial integrity and in the second half it may be able to guarantee our energy security. the Indian government has warmed up to the proposition in the past couple of months. Russia and China is anathema to the Bush administration.” he declared. “In the first half century of independence. When completed. . but defence issues. Russian president Vladimir Putin called for close collaboration between the two nations and China.” she told the media. would be a significant financial boost. not only on economic.” Chinese prime minister Wen Jiabo is due to visit India in April. The prospect of a developing economic and strategic bloc between India. 31 March 2005 <http://www. Yadavaran. Annual transit fees from the “peace pipeline”. “[A]ny move to strengthen Iran.50 IPRI Factfile Soviet Union.wsws. would be frowned on by the United States. … K. but against any opposition to US interests—from China in particular. the Indian government gave its approval to the four-billion-dollar project. amounting to an estimated $200-300 million. The US demand to abandon the Iranian pipeline carries an implied threat to India’s other relations. Rice’s attempts to forge closer ties with India are not just aimed at Iran. however. be a major economic blow to Pakistan.

Pakistan stands to gain financially through transit fees for gas supplied to India as well as supplies for itself. there is the possibility that the nationalist elements in the province would object to any such venture in which their share is not conceded. including the US. the export of gas would earn the country badly needed foreign exchange. Such an undertaking will go a long way in cementing the bonds of cooperation between Iran. including the United States. this is a genuine worry and needs to be addressed in all seriousness. If the problems in Balochistan are not resolved satisfactorily. Studies suggest that Pakistan’s gas shortfall will start from 400 million cubic feet per day in 2010 and will increase to four billion cubic feet of gas per day by 2025. Rajasthan and Gujarat states. For Iran. regarding the gas pipeline project with Iran". over the gas pipeline project from Iran. For the project to move forward. Most of India’s concerns relate to security and the guarantee that gas supply will not be disrupted even if India-Pakistan relations sour in the coming years.htm> I NDIA SAYS U NDER NO P RESSURE OVER I RAN G AS P IPELINE P ROJECT India's Petroleum Minister Mani Shankar Aiyar said here on Saturday that India is under the pressure of no country. . For India. With limitless possibilities. it must expect the onset of a domestic energy crisis. one important area that needs to be tackled is the law and order situation in Balochistan. "There is absolutely no pressure on India from any corner.dawn. Aiyar said. Dawn (Editorial). as the economy grows at the rate of over seven per cent annually. attention should focus on actually getting the project off the drawing boards as soon as possible.Gas Pipeline Projects in South Asia 51 One hopes that during the visit of the Indian oil minister to Pakistan later this month. Keeping in mind past experience. If Pakistan is unable to obtain gas from outside sources. A share of the royalties can be passed on to the provincial government considering the underdevelopment of Balochistan. the idea of cooperation on energy resources should be taken up on a priority basis.com/2005/05/10/ed. Pakistan and India. 10 May 2005 < http://www. the transmission of natural gas from Iran will tie in with the gradual decline in domestic gas production. the pipeline project will mean a cheaper alternative to its expensive fuel imports to run industries in Punjab. For Pakistan. both countries will be able to sort out all outstanding issues relating to the pipeline project. The project promises great potential for all the three countries involved. While there is agreement on the need for such a transmission pipeline in the region. which has been under American economic sanctions in one form or another since 1979.

Iran is capable of meeting very large section of India's energy requirement. Aiyar said that he will not hold any trilateral meeting with Pakistan and Iran during this trip. According to him. Elaborating on his vision of energy grid. Talking about how cooperation in the field of energy might bring Asian countries closer to each other. China and Pakistan all would be partners in the energy grid." Concerning China's interest in the Iran-India gas pipeline project Aiyar said it is for Iran to pursue the proposal with the Chinese. Because Iran's reserves are so large. At the moment there is no trilateral meeting on the agenda. Instead. there should be harmony between the producers and consumers in the continent. It should be ." the Indian minister said. Regarding the difficult issue of price of the piped gas. Aiyar mooted a formula. In fact we know that the Yadavaran field will see a Chinese company play a very vital role. "The price of the gas should follow a simple formula. he stressed. it hoped we were aware of the their concerns." Aiyar noted.52 IPRI Factfile "All that the United States has asked India was that. the cooperation of Asian countries might become a similar platform for similar ventures in the continent. Russia. an overland pipeline that could carry gas to India would transform India's energy sector. "We should have a cooperative atmosphere in Asia." Aiyar stressed. We told in response that we are aware of your concerns but hope that you. Aiyar said gas alone is not sufficient for the formation of the energy grid. "The meetings would be back-to-back. he said." Aiyar recalled the remarks by Pakistan President Pervez Musharraf regarding the gas pipeline project from Iran when he noted in a communication that "if it was all right for Europeans to come and purchase gas from Iran than why should Asian countries not buy Iranian gas". Therefore. "I think Iran is the anchor for any energy security in India. Iran. Regarding his coming trip that will take him to Pakistan. Iran. "China and India should cooperate with each other rather than compete for energy. Asia is the largest producer and consumer of oil and natural gas. there will be a series of bilateral meetings between Iran and India and India and Pakistan and others. Kazakhstan. are aware of our concerns. too. Azerbaijan and possibly also Qatar. Asia which is the largest producer of oil should also include crude as one of the pillars of the energy grid. Aiyar said like the European Coal and Steel Community which was the precursor of the European Union.

The Indian delegation was led by Mr Aiyar and his counterpart Amanullah Khan Jadoon led the Pakistani side. The Indian side also asked Pakistan to allow import of diesel and other petrochemicals from New Delhi and indicated to become part of proposed gas pipelines from Turkmenistan and Qatar. The two sides will continue discussions on Monday and issue a joint communiqué at the conclusion of the two-day talks. “Iran does not suffer on selling gas but we both countries will be buying the gas at affordable prices. 4 June 2005 <http://www. . he said both sides had agreed that the price should be affordable.” he added. Mr Aiyar told a news conference after the first round of talks that both India and Pakistan had shared interest in the pipeline project as buyers and should adopt a shared strategy to negotiate a better gas price with Iran. June 5: Pakistan and India on Sunday discussed wellhead gas price. Mr Aiyar said both countries discussed the issues of wellhead prices. Responding to a question about the pipeline transit fee to be paid to Pakistan.irna.Gas Pipeline Projects in South Asia 53 remunerative for Iran and affordable for India. In this regard. When asked whether the two countries had agreed to adopt a joint modus operandi for negotiating gas price with Iran.ir/en/news/view/line-17/0506040206122152.htm> G AS R ATE . These issues would be further discussed on Monday and future discussions would be carried out in technical meetings till these issues were resolved. T RANSIT F EE D ISCUSSED I NDIA P IPELINE WITH I NDIA : I RAN TO ISLAMABAD. The Indian minister will call on Prime Minister Shaukat Aziz and Commerce Minister Humayun Akhtar on Monday to formally seek approval to export diesel and other petroleum products to Pakistan." IRNA (Tehran). cost of transmission and transit fee. Indian Oil Minister Mani Shankar Aiyar asked Islamabad to invite him to future meetings on Turkmenistan and Qatar gas pipelines. he said the issue would be resolved in line with international standard practices. transmission cost and transit fee of the Iran-to-India gas pipeline through Pakistan and agreed that land route was technically and economically the most viable option for the project. He said Pakistan officials gave a detailed briefing on Pakistan’s gas economy on the first day of discussions and details about the oil and gas reserves in Pakistan and its energy requirements at the official level for the first time.

but said since the studies were conducted quite a long time ago they were required to be updated in view of the latest gas requirement of both countries. he said the Pakistani prime minister and the petroleum minister had promised to address New Delhi’s concerns on the issue. He said a section of the gas pipeline from Qatar would pass through the sea and India had asked Pakistan to provide details of the feasibility study on the Qatar gas pipeline for its examination.htm > .dawn. he said India would decide about the project as per its gas requirements and added that New Delhi was not under US pressure on this issue.” he said. he said he would be visiting Beijing some time in November and he would ask the Chinese authorities on his own to become part of this project. Dawn. 6 June 2005 < http://www. he added. Mr Aiyar said Pakistan had been informed that India wanted gas and LNG from Iran. Trade of hydrocarbon would help improve the lot of poor people of both the countries. Khaleeq Kiani.54 IPRI Factfile Mr Aiyar said the Indian side also shared its gas needs in the meeting. Aiyar said that discussions on gas pipeline were currently at the preliminary information-sharing stage. Afghanistan and Pakistan gas pipeline for the import of gas from Turkmenistan. Mr.com/2005/06/06/top1. When asked whether the Indian side had raised any concern about the security of the pipeline and uninterrupted gas supply. In this regard I will meet Commerce Minister Humayun Akhtar on Monday for export of diesel and other petrochemicals to Pakistan. “Ministers only dream and babus implement the dreams. He said India wanted to import gas from everywhere keeping in view its needs. he said it was his dream but he did not discuss the matter during the meeting. The Indian minister said both sides had agreed to jointly study the pre-feasibility studies carried out by the BHP Company about the IranPakistan-India gas pipeline. Some years back gas pipeline from Iran via Pakistan to India was a dream. Mr Aiyar said: “We want the mutual trade based on mutual investment also. However. When asked whether he took up his proposal to make China a part of this project. and also from Turkmenistan and Qatar.” About the US pressure on the pipeline project. He said he had asked his Pakistani counterpart to invite him to future meetings of the steering committee of Turkmenistan. Both sides had agreed to share knowledge about their respective studies on gas pipeline projects.

U. Indian Oil Minister Mani Shankar Aiyar said the two sides discussed not only a pipeline from Iran.S. pipeline is expected to begin within the next six months. ambassador to Islamabad in a written statement denied the United States is pressuring Pakistan against importing natural gas from Iran. Crocker said there is U.800-kilometer pipeline will transport natural gas from Iran to India through Pakistan. I am trying to lay a pipeline. Minister Aiyar says the discussions on the security of the pipeline are also progressing well. Local media quoted Ambassador Ryan Crocker as saying. saying the nearly $4 billion project will help strengthen ties and fuel their energy-hungry economies. But in the wake of rapid improvement in the bilateral ties. has mentioned its concerns to us. but it has never gotten off the ground mainly because of India's tense relations with Pakistan. Aiyar says his government understands the concerns. it will be the IPI that takes off first.” He said. Tehran proposed the project in 1996. Mr. "The U. to addressing security concerns in a serious and sincere manner. but also from Turkmenistan and Qatar. Of the three projects. “You are hoping to make a headline." he added. "There has been positive forward movement and there has been milestones put in place.Gas Pipeline Projects in South Asia 55 P AKISTAN .S. Speaking to reporters at the end of his talks with Pakistani leaders Tuesday.S.” Mr. The minister says that work on the Iran-Pakistan-India (IPI).S. ”I am hoping that in consequence of this we will be able to report substantial progress by the end o the year. I NDIA G IVE T OP P RIORITY FROM I RAN TO G AS P IPELINE Pakistan and India have agreed to give top priority and accelerate preparations for a proposed gas pipeline from Iran to South Asia. Meanwhile. legislation against .” Mr. "We have now moved from the stage of asking questions about security. we have said to them that we are sensitive to their concerns and we trust that they are aware of our requirements." The nearly 2.” he noted. but needs energy. Aiyar says he will hold talks with Iranian officials later this week to discuss the project. it does look as if it's likely that in the phasing of the three projects. particularly its cost and security. "the U. government does not believe in exerting pressure on strategic partners like Pakistan on any question. Responding to questions about Washington's opposition to the proposed pipeline project from Iran. As far as India is concerned.

Aiyar promises fast negotiations — starting with an early visit of his counterpart Amanullah Khan Jadoon to India at the end of August.56 IPRI Factfile investment in Iran but that President Bush can always make an exception if it is in the U. Aiyar had said India is now also willing to be included in the process behind the other pipeline option — Turkmenistan via Afghanistan and Pakistan (also known as TAP). On Sunday. India and Pakistan have set up a Joint Working Group (JWG) to move the project forward. The Journal of Turkish Weekly.php?id=12211> T O C HECK S LIPS . Pakistan Prime Minister Shaukat Aziz — whom Aiyar met earlier in the day — said: ‘‘Pakistan gives top priority to the overland gas pipeline for the supply of gas to Pakistan from Iran and Turkmenistan and to carry it forward to India. Today. commercial and legal issues relating to the pipeline. While Aiyar’s six-month timeline takes note of Pakistan’s desire to take a final decision on the Indo-Iran pipeline by the year-end. June 6: In a boost to the Iran pipeline project.S.turkishweekly. In a statement. he added that following his meet with Aziz. national interest. The shadow of US reservations on the Iran pipeline was evident in the minister’s insistence that the various pipeline proposals be looked at as ‘‘not mutually exclusive. ‘‘We would like to get this project to some significant ground by the end of this year. 7 June 2005 < http://www. appropriate steps are to be taken to get India on board. An invitation is expected from the Asian Development Bank for India to join the next Steering Committee meeting.net/news. . not only to meet its own energy requirements. ‘‘I hope to be there to signal India’s intent to convert TAP to TAPI.’’ It is learnt that Pakistan insisted the JWG be headed by the two countries’ Petroleum Secretaries.’’ he said. but additions.’’ This bilateral engagement will run parallel to India’s talks with Iran on the issue.’’ said Petroleum Minister Mani Shankar Aiyar as Pakistan’s National Assembly began to hear the budget. P AK S ET UP JWG ON P IPELINE ISLAMABAD. I NDIA . A formal note on its structure will be issued on Tuesday. that may require phasing to meet growing energy requirements. It will clarify positions on technical. but also to create linkages and interdependencies for establishing an enduring relationship between the two countries. the JWG marks the first time the two countries will engage on meeting their long-term energy requirements.

legal and related issues to realize a safe and secure world-class project. The statement said that two countries were agreed that the IranPakistan-India gas pipeline project. . at the earliest.php?content_id=71851> P AK -I NDIA A GREE ON I RAN . would go a long way in meeting the energy requirements of the two countries. which envisaged supply of gas to Pakistan and India through a transitional pipeline. Pakistan outlined the parameters of the proposed Gulf South Asia Pipeline project and India also expressed in participating in this project. he said: ‘‘The US is sensitive about our requirements. G ULF S TATES G AS P IPELINE P ROJECT ISLAMABAD. India also provided some details of arrangements to import LNG and both sides agreed to share technical information and experience in this regard with the Pakistani side. T URKMENISTAN . and Gulf states and constitute a joint working group at the Secretary-level to start the gas pipeline project of Iran to India via Pakistan. It was announced in joint press statement issued here on Tuesday at the end of four-day official visit of Indian Oil Minister Mani Shankar Aiyar. Both sides explained to each other's energy requirements of gas by pipeline and the arrangements worked out. technical. To this end. India expressed its ‘‘deep interest’’ in the technology being considered. It stated that it should be seen as a significant project for the benefit of the peoples of these countries. Turkmenistan. which will meet regularly and report progress to the minister to facilitate definitive by them.Gas Pipeline Projects in South Asia 57 Regarding US pressure. There is a third. June 08 (Online): Pakistan and India have agreed to import gas through Iran. commercial. Pakistan is looking at a sub-sea pipeline from Qatar. it was agreed that the momentum pertaining to the project should be accelerated by constituting a joint working group at the secretary level. The Indian Express.’’ Both projects were feasible. Pakistan provided the details of Turkmenistan-Afghanistan-Pakistan gas pipeline project in which Indian Minister showed their interest in participating in this project.com/full_story. 7 June 2005 < http://indianexpress. Sunit Arora. Indian Minister Discusses Pipeline with Musharraf Indian oil minister Mani Shankar Aiyar met with President Gen Pervez Musharraf at Army House in Rawalpindi on Tuesday and thrashed out with him proposed $ 4 billion Iran-Pakistan-India natural gas pipeline project. Both countries agreed to exchange information in regard to financial structuring.

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Sources privy to the meeting quoted the president as saying that the project is in the interest of three countries since it would generate huge economic activities, thus, contribute to ongoing efforts for reducing poverty, creating more jobs and improving quality of life in the region. The president emphasized modalities of the project be finalized at the earliest so that work on it could start by next year. He assured the Indian minister that the pipeline passing through Pakistan would be fully protected. He brushed aside concerns by the United States on the gas pipeline project, saying, "there is nothing for anyone to worry about the project. The project will not be abandoned at all." He said Islamabad would have no aversion if India was interested in partaking in projects meant for Pakistan procuring gas from Turkmenistan and Qatar, and would rather welcome its involvement in them because like Pakistan, India also requires to import gas to meet its energy requirements. Gen Musharraf said the completion of proposed gas projects would not only promote mutual relation of the three nations but would also accelerate socio-economic activities in the entire region. He said, "It's our earnest desire to finalize matters on gas pipeline with India and Iran at the earliest." The Indian oil minister updated the president on his two-day official talks with Pakistani counterpart Amanullah Jadoon on the project and said both the countries had agreed to start work on it soon. Mani Shankar said both New Delhi and Islamabad would negotiate with Tehran on the project soon for finalizing its technical, financial and legal specifications. Sources said the Indian offer for supply of 325,000 tons of diesel at concessional rates to Pakistan from its refinery at Panipat also came up for discussion in the meeting. Petroleum and natural resources minister Amanullah Khan Jadoon was also present in the meeting.
Pak Tribune, 8 June 2005 < http://www.paktribune.com/news/print.php?id=108492>

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WASHINGTON, June 12: Pakistan is believed to have informed the United States that it cannot abandon the Iranian gas pipeline project despite a strong US opposition to the scheme, diplomatic sources told Dawn. The project was discussed in detail at a meeting between Foreign Minister Khurshid Mehmood Kasuri and US Secretary of State Condoleezza Rice in Washington on Friday.

Gas Pipeline Projects in South Asia

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Ms Rice, who has publicly opposed the project, reiterated Washington’s position that the proposed pipeline, which will be bringing Iranian gas to India through Pakistan, is against US laws. The US Iran and Libya Sanctions Act of 1996, known as ILSA, forbids more than $20 million of investment in Iranian oil and gas projects. The violator can be deprived of US economic assistance and may also face sanctions. During the meeting Ms Rice is believed to have argued that even if the US administration gave up its opposition to the pipeline, there were powerful groups in Congress, media and academia that would continue to oppose the project and it will ultimately adversely affect Washington’s relations with Islamabad. Pakistan’s response, conveyed by Mr Kasuri, covered both the economic and political aspects of the proposed deal. Pakistan argued that it would earn up to $600 million a year from the pipeline, which is close to about $700 million a year Islamabad receives from Washington. The pipeline will also allow Pakistan to import about $1 billion of gas every year from Iran. As Indian oil minister Mani Shankar Aiyar pointed out during his recent visit to Islamabad, Pakistan will have to import gas by 2010 to meet its domestic and industrial requirements. Pakistan already consumes more per capita energy than India and has a high domestic consumption. In Pakistan, domestic users consume more energy than both industrial and agriculture users who are second and third on the list. In India, agriculture has the highest consumption of energy, followed by industrial and domestic users. The pipeline will also create a major industrial infrastructure in Pakistan, generating new jobs. Pakistan also pointed out that the Iranian pipeline to India will have a major political impact on South Asia and will add a huge economic incentive to the ongoing peace process between India and Pakistan. Both are major reasons for Islamabad to opt for the Iranian project, the Pakistanis argued. Responding to Pakistan’s concerns, Ms Rice is believed to have urged the Pakistani delegation to look at other options as well, such as bringing a pipeline from Qatar or the Central Asian republic of Turkmenistan. Pakistan said that bringing gas from Qatar would double the cost while gas reserves in Turkmenistan are still unproven. Political instability in Afghanistan is another cause for concern that will need to be sorted out before a pipeline is routed through that country. Despite this frank and bold response, there are concerns in the Pakistani camp that annoying America over the project could have serious economic and political consequences for the country. Pakistan is a major recipient of US economic assistance. Recently,

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Washington has also resumed military assistance to Islamabad and in March agreed to sell the much-needed F-16 fighter jets to the Pakistan Air Force. India, the major partner and the beneficiary of the gas pipeline, receives only $25 million of annual humanitarian assistance from the United States and still buys its weapons from Russian and European sources. Wary of the obvious consequences of annoying America, Pakistan is trying to convince the Americans that it will not be violating any US law by agreeing to build the Iranian gas pipeline. Pakistanis say that they will not make any investment in Iran’s oil infrastructure, which ILSA forbids. The Iranian side of the project will be financed entirely by Iran and a group of multi-national investors Iran will be required to put together. Pakistan’s investment into the project will start only after the pipeline reaches the Pakistani territory.
Anwar Iqbal, Dawn, 13 June 2005 <http://www.dawn.com/2005/06/13/top2.htm>

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LONDON, July 9 (Iran Mania) - Pakistan on Thursday signed an agreement with Iran for a gas pipeline project with gas supply from Iran expected to begin within three years, state media said. "The two sides have agreed to the terms and conditions of the project, we hope to start receiving gas from Iran within the next three year," Pakistan's Petroleum Secretary Ahmed Waqar was quoted as saying by the Associated Press of Pakistan. Waqar and Iranian Deputy Minister for International Affairs M.H. Nejhad Hossiniyan signed a memorandum of understanding (MoU) in Islamabad, it said. "After many years we have signed an MoU which is the first written document about gas export from Iran to Pakistan," Iran's Petroleum Minister Bijan Namdar Zanghaneh said after the signing ceremony. "By the year 2010 we will be facing shortage of gas in Pakistan for which we have started planning," Pakistan's Petroleum Minister Amanullah Khan Jadoon said. Pakistan Prime Minister Shaukat Aziz hailed the agreement. "It is the translation of an idea into a reality," Aziz said. "Pakistan is very keen about Iran-Pakistan gas pipeline project and would like it to start as soon as possible. The key is speed and transparency." The 2,600-kilometre (1,600-mile) overland gas pipeline project, with an estimated cost of about 4.5 billion dollars, has been strongly opposed by the United States because of its concerns about Tehran's nuclear programme.

where they are expected to explain their respective point of view on the issue. The pipeline will supply gas from the massive South Pars offshore fields in the Gulf. Mr Aiyar also urged the two delegations to prepare a time frame in respect of various items pertaining to the project. India has been formally invited to a Steering Committee meeting of the Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project due to be held later this month.” the statement said and added: “Both the sides conveyed their serious . The venue has not been named.iranmania. since January 2004. However. the two energy-starved countries have been engaged in a peace process and relations are at their best for years. July 13: The first meeting of India-Pakistan Joint Working Group on the Iran gas pipeline project ended here on Wednesday with a commitment from both the sides to push forward the project despite US objections. The prime ministers of both the countries will be in Washington this month. Besides having substantial delegation level discussions. I NDIA P LEDGE C OMMITMENT NEW DELHI. Aiyar had also held talks with Zanghaneh in Tehran last month to discuss the deal. Negotiations for the pipeline began in 1994 but made little headway because of tensions between Pakistan and India. which have fought three wars since gaining independence in 1947 from Britain.asp?NewsCode=33213&N ewsKind=Current%20Affairs> D EADLINE S ET FOR F INAL P ACT ON G AS P IPELINE : P AKISTAN . officials said. a joint statement said. “The discussions between the two delegations were marked by a positive and constructive approach and were held in an atmosphere of candour and mutual understanding. To keep the other options open for their mutual quest for piped gas. 9 July 2005 <http://www. the Pakistani side led by Petroeleum Secretary Ahmad Waqar called on Indian petroleum Minister Mani Shankar Aiyar.Gas Pipeline Projects in South Asia 61 India's Oil Minister Mani Shankar Aiyar was in Pakistan last month and his visit concluded with the setting up of a joint working group to thrash out the details of the proposed pipeline project. Mr Aiyar “conveyed the firm support of the government of India to the Iran-Pakistan-India pipeline project and other trans-national pipeline proposals under consideration”. which would also transport gas to India via Pakistan.com/News/ArticleView/Default.

at ministerial-level. Pakistan and Iran. “The two delegations had in depth discussion on the technical. financial. the provisions of the Energy Charter would be referred to. arrangements would need to be provided for in every aspect of the project. Various approaches to determine a reasonable price of gas as also various options pertaining to project structure were discussed by the two delegations. It was agreed that technical experts of the two countries would meet quickly in order to harmonize the position of the two sides in this area to achieve a project of international standard. commercial. In this regard. The two sides agreed on the crucial importance of urgently appointing their respective financial advisory consortium to advice on project structure and related technical. The two sides agreed that the price of the gas as well as the project structure were of crucial importance. The two sides agreed that they shared an immediate commonality of interest in regard to the technical aspects of the project such as the size and specifications of the pipeline. financial commercial and legal aspects of the project. interspersed with periodic interactions. commercial and legal matters. It was agreed that they would be established on the basis of techno-economic considerations.” the statement said. “The two sides noted with satisfaction that each of them had initiated the process of joining the Energy Charter. it was agreed that the Indian side would submit a draft text to the Pakistani side before the next meeting of the JWG. They agreed that in the various inter-governmental agreements entered into by them in respect of the project. they would enter into a ‘Framework Agreement’. The two sides agreed that in order to realize a safe and secure world class project.” . including technical. financial and legal matters. the quantum of gas required by the two countries and the build-up period.” They agreed that dialogue on the basis of bilateral joint working groups between India. They agreed that every effort would be made to appoint the respective financial advisory consortium at the earliest. initially with observer status. the quality of gas. It was agreed that the matter would be pursued in greater detail at subsequent meetings of the JWG. The proposed pipeline routes and delivery point were also discussed. The two sides agreed that once basic issues pertaining to the project had been satisfactorily resolved between the three countries concerned. provided a satisfactory mechanism to address and resolve all matters pertaining to the project.62 IPRI Factfile commitment to address various issues pertaining to the project so as to maintain the momentum of the dialogue.

14 July 2005 <http://www. sanctions — a good reason not to touch the project.htm> I NDIA -I RAN R ELATIONS : A F AREWELL TO THE G AS P IPELINE ? H AS THE P ROJECT BEEN S USPENDED F OLLOWING US P RESSURES ? Businessmen and economists who have misgivings about the creditworthiness of one of their projects do not usually advertise that fact when they are in the market for a loan. says is a "hardliner.dawn. more precisely. Asked about India's discussions with Iran on the pipeline.S. which is vital to India's energy security in the near to medium term. Javed Naqvi. The two sides discussed the other pipeline proposals under consideration by them — TAP pipeline and the Gulf-South Asia (GUSA) pipeline. He then added: "But I am realistic enough to realize that there are many risks. Which is why it was surprising to see Prime Minister Manmohan Singh being so candid in an interview to the Washington Post on Wednesday on the bank ability of the proposed gas pipeline from Iran. In what is another first in the Indian discourse on the pipeline. to the negative reaction in Washington to the Iranian electorate's choice of a man the U. Dawn. the Prime Minister has linked the riskiness of the project to "the uncertainties of the situation there in Iran. “They noted that India had been invited to attend the next meeting of the Steering Committee of the TAP Project. What the Prime Minister has done is to give international bankers — who were not exactly queuing up anyway because of the fear of U. “The Pakistani side briefed the Indian side on the latest developments pertaining to the project as also on their recent discussions pertaining to the GUSA project.com/2005/07/14/top4. presumably. because considering all the uncertainties of the situation there in Iran." Whether he deliberately meant to do so or not. the two sides agreed that the next meeting of the JWG would take place in Islamabad by the end of August 2005." This is. a reference to the election of Mohammed Ahmadinejad as President of Iran earlier this month.” the joint statement said.S. Dr. I don't know if any international consortium of bankers would probably underwrite this. Singh's last sentence is likely to knock the stuffing out of the ambitious project's financial prospects. Or.Gas Pipeline Projects in South Asia 63 In order to carry the process forward. the Prime Minister said India desperately needed new sources of energy." .

All the old arguments — about becoming dependent on Pakistan. Ahmadinejad has forced the Bush administration to rework its sums. paying transit fees to the Musharraf regime.S. If the Bush administration is able to implement its commitments. wanting reverse transit rights. flexibility on the nuclear question to the Iran pipeline. as have the recent attempts by China to speak of a new security framework for Asia and the Shanghai Cooperation Organisation's call for the U. On Monday. Now that the grand energy `bargain' has been struck in Washington. the Prime Minister's new-found scepticism on the Iran pipeline will heighten the suspicion that the Bush administration is extracting a very heavy price from India in exchange for recognising it as a state with "advanced nuclear technology. For one. Nuclear energy today provides barely four per cent of India's energy needs. If the new U. one can safely predict that the tone and tenor of discussions about the pipeline within the "strategic community" in India will shift from qualified support to outright hostility. the Indian nuclear energy sector could potentially get a boost in the short-term. Secretary of State Condoleezza Rice was the first to explicitly link U. safety and security — will be recycled in order to justify walking away from a project which Dr.S. his remarks to the Washington Post certainly suggest a major shift in the Indian position is already under way.S. Those who argue that this condition is an acceptable price to pay do not realise the crucial role hydrocarbons — and in particular natural gas — will have to play as a source of energy for India's growing economy. the Manmohan Singh government itself showed a new willingness to engage with America's strategic agenda in Asia. Her advice that India abandon the Iranian project drew a spirited public rebuttal from External Affairs Minister Natwar Singh but a lot has changed since then. U.64 IPRI Factfile Shift in India's Stand? Taken together with Monday's deal on nuclear energy with the United States. to declare when its troops will leave Central Asia. What is left now is the implementation. Washington delivered on its promise of an agreement on the nuclear front.S. the unexpected election of Mr. Singh himself so boldly put onto the energy and diplomatic agenda of the country earlier this year. the key to its unlocking lay in the safeguards and test ban concessions India made.-India defense framework took New Delhi up to the door. In proposing an "energy dialogue" with India when she was in New Delhi in March. For another. . And India has been told in no uncertain terms that if Congress is to legislate the changes President Bush has committed — he could have used a Presidential waiver but chose not to — the pipeline deal with Iran must not go through. Iran and Pakistan alone and that "outside parties" had no role to play. Singh told reporters prior to his departure from Washington on Thursday that a decision on the pipeline belonged to India." Though Dr.

php?context=viewArticle&code=VAR2005072 3&articleId=729> T RI -N ATION P IPELINE P LAN M AKES H EADWAY : F OREIGN F INANCING L IKELY ISLAMABAD.ca/index. Security of transit through Pakistan remains an issue but there are a number of financial and political solutions available. Some Indian concerns are also reported to be willing to finance it. There is no problem of arranging funds for the 2. U. and Central Asia. at best. Losing interest in the project — or discouraging potential investors from getting involved — is the last thing India should be doing. July 28: Iran. 23 July 2005 <http://www. It is because Washington knows the involvement of Iran in this kind of project will undo the efforts it has made all these years to dominate the transit routes of Asian energy. including the involvement of China as the end-point of the pipeline. however. Sources said that Italy’s ENI Company.670km pipeline either as international banks and institutions consider it a feasible project. it is also the key which will help us unlock the potential of a panAsian energy grid involving Central Asia and China as well.S. nuclear power will generate. A meeting presided over by Prime Minister Shaukat Aziz on Wednesday discussed Pakistan’s growing energy needs and decided to pursue . Siddharth Varadarajan. The Hindu. Informed sources told Dawn on Thursday that the US concern had not made the three countries to put brakes on. or even slow down. had expressed willingness to finance the project.” a source close to the talks said. the sixth largest oil and gas producing concern in the world. Where is the remaining 80 per cent going to come from? Piped gas from Iran is a low-cost source but even this would need to be supplemented by gas imports from Myanmar. Even with the most optimistic predictions. it is learnt. Pakistan and India are going ahead with their $4 billion gas pipeline project despite Bush Administration’s serious reservations over it. the project as talks on its various aspects were continuing.globalresearch. opposition to the pipeline is not just because of its antipathy to the Islamic regime that is in power there. some 20 per cent of our energy needs by 2030. Importing gas in liquefied form is an option but the costs are much higher. “The gas project is very much on the cards and will not be abandoned. Qatar. The Iranian project is not only vital for India's medium-term energy security.Gas Pipeline Projects in South Asia 65 though many former and serving scientists in the Department of Atomic Energy have grave reservations about the compromises the Indian side will have to make.

His comments. Dr Singh referred to the “many risks” the project entailed. Indian Prime Minister Manmohan Singh’s comments in Washington earlier this month that the Iran-Pakistan-India project was fraught with risks and that it would be difficult to get an international consortium of bankers to underwrite it were described as ‘politically motivated’ and meant for public consumption.htm> P IPELINE A SSURANCES INDIAN Prime Minister Manmohan Singh’s statement in the Lok Sabha that the US understood India’s need to have “unhindered access” to “adequate and affordable energy supplies from all sources” should allay fears that New Delhi might drop out of the Iran-Pakistan-India pipeline project that is strongly opposed by Washington. Unlike the scepticism aired by the Indian media. gas will come from Turkmenistan and Qatar. Pakistan would be required to invest around $1 billion to lay its part of the pipeline from the Iranian border to the India border. 29 July 2005 <http://www. A final decision. were seen as contradictory to Indian Petroleum Minister Mani Shankar Aiyar’s latest statement in which he said that New Delhi would go ahead with the project as scheduled. Two technical groups were conceptualizing the project structure with a view to making it safe. the sources said.66 IPRI Factfile the three proposed gas projects. 705km in Pakistan and 850km in India. The three countries are expected to firm up separate consortia for building the pipeline in their territories. Doubts arose when. in view of the uncertain situation in Iran and the likely reluctance of financiers to provide funds for the project. “Both Pakistan and Iran have assured India that there will be no security problem to the pipeline. which met in New Delhi recently. held preliminary discussions on the proposal. He also talked . Dawn. It is learnt that the Pakistan-India joint working group. Under other projects. the sources said.com/2005/07/29/top1. Ihtasham ul Haque. technical experts in that country do not have two opinions about the importance of the pipeline or the sovereign guarantees offered by Pakistan for its security under an international agreement. in an interview with the Washington Post during his recent US trip. Pakistan and India would soon appoint separate consultants to prepare structure for the formulation of consortia and other pros and cons of the project. The pipeline would run about 1. The source said that India was seeking subsidized gas prices from Iran and that was the reason it was talking about the so-called risks. would be taken once the transaction structure developed. especially to the satisfaction of the Indians.” a source said.115km in Iran. the sources said.dawn.

dawn. Dr Singh’s assurances to parliament are thus welcome and closely follow those of the Indian Petroleum Minister. Mani Shankar Aiyar. and referred to militancy in Pakistan. President Musharraf has chosen not to attach too much importance to Mr Singh’s controversial utterances and has said that the peace process remains on track. the pipeline is also important to the ongoing confidence-building process between India and Pakistan. In clarifying Pakistan’s stance. and publicly expressing misgivings about its viability can only create mistrust. Besides meeting energy needs.htm#2> . India may have entered a new era of cooperation with the US. While one should regard Dr Singh’s swipe at Pakistan (and Iran with whom India has strong ties) as a onetime deviation.Gas Pipeline Projects in South Asia 67 of “reckless” nuclear proliferation in the region. who denied any American pressure on India vis-à-vis the pipeline deal and said that there was “no going back” on the project. had threatened to block progress on peace. but it should not allow its judgment to be influenced by Washington’s likes and dislikes. The pipeline is in the interest of all three countries. 31 July 2005 <http://www. Dawn (Editorial). one expects him to refrain from saying things that could derail the peace process and also affect potential economic and energy benefits. set off by Mr Singh’s earlier statements to the Post and his remarks at various points of his US visit.com/2005/07/31/ed. Security considerations should ideally be talked over directly with the parties concerned and any kind of media speculation should be avoided at this delicate stage of the peace process. The speculation. Moerover.

It has been decided that the committee shall be meeting in the coming weeks with mutually convenient schedule to work out the financial and other technical aspects of the project. Abdullah bin Hamad Al-Attiya and Pakistani Minister Mr. import of LNG from Qatar to Pakistan was considered as an additional option to be pursued on parallel basis.gov. 16 February 2005 <http://www. In a joint communiqué issued here today at the conclusion of a two day meetings between the visiting Deputy Premier and Minister for Energy and Industries Mr. Minister of State for Petroleum Muhammad Naseer Mengal. LNG.68 IPRI Factfile IV. The Qatari side offered to provide technical assistance in different areas of oil and gas sectors to Pakistan. Q ATAR TO S PEED UP W ORK ON G AS P IPELINE DOHA: President Gen Pervez Musharraf and Emir of Qatar Shaikh Hamad bin Khalifa Al-thani held wide-ranging discussion on bilateral and regional issues on Sunday as they agreed to expedite initial work on a pipeline project for export of gas from Qatar to Pakistan. G ULF -S OUTH A SIA G AS P IPELINE P AKISTAN . Secretary Petroleum Ahmed Waqar and senior officials of the Ministry assisted the Pakistani Minister in the talks while the Ambassador of Qatari and members of the delegations assisted the Qatari Deputy Prime Minster. liquefied Natural Gas (LNG). O IL AND G AS P ROJECTS Pakistan and Qatar have agreed to cooperate in the gas pipeline project. of technical assistance and investment in the oil and gas. the potential Qatari investors would be encouraged to make investment in Pakistan. The two leaders met here Diwan-e-Emiri soon after President Musharraf’s arrival for a two-day state visit.php> P AKISTAN . A delegation of Qatari experts will visit Islamabad shortly to hold talks with their Pakistani counterparts for . In views of advance technological expertise of the State of Qatar in the field of LNG. Ministry of Petroleum and natural Resources and Director of Oil and Gas Ventures (QP) for discussing and resolving technical and other related issues with regard to Qatar-Pakistan Gas Pipeline Project.mpnr. Q ATAR A GREE T O C OOPERATE I N P IPELINE .pk/Press%20Release%2062. Keeping in view of liberal investment polices of the Government of Pakistan. Amanullah Khan Jadoon said that both sides held talks on bilateral cooperation in the field of oil and gas and agreed to set up a high level committee headed by the Secretary.

The talks concentrated on the project to erect the Qatari liquid natural gas to Asia (India and China) via the Pakistani territories. saying the country needs to import gas for meeting its growing energy requirements in both agricultural and industrial sectors.com. Labour and Manpower Minister Sarwar Khan. Musharraf in Doha talks that dealt with oil and gas projects between the two sides as well as means of enhancing bilateral cooperation relations. Musharraf is due to meet with Qatari businessmen in the framework of Islam Abad attempts to increase the volume of its trade exchange with the Arab Gulf states. "Pakistan needs more gas to further fuel and sustain higher economic growth in the years ahead. The president informed the Emir about Islamabad’s efforts for establishment of durable peace in South Asia through resolution of longstanding Jammu and Kashmir dispute with India. Shaikh Hamad said his country greatly values Pakistan’s recent economic progress and would like to continue its participation in the development of the country. Foreign Minister Khurshid Kasuri later told APP.htm> Q ATARI G AS P IPELINE F OR A SIA T ALKS IN H AMAD -M USHARRAF The Amir of Qatar Sheikh Hamad Bin Khalifa Al Thani held on Monday with the President of Pakistan B. 6 June 2005 <http://www. . Investment and Privatization Minister Dr Hafeez Shaikh. Welcoming President Musharraf.jang. They also discussed reform of the Organisation of Islamic Conference and agreed that it should be made an effective body. adding that the 8.3 per cent growth rate achieved by Pakistan this year ranks second only to China. Minister of State for Petroleum and Natural Resources Muhammad Naseer Mengal and Minister of State for Water and Power Engr Amir Muqam were accompanying the president during the meeting. Musharraf informed his host about Pakistan’s recent economic strides. The two leaders also exchanged views on the Middle East situation with reference to Palestinians’ right to an independent homeland. The president said Pakistan is facilitating foreign investors as economic activities help generate employment opportunities and therefore reduce poverty. Foreign Minister Khurshid Mahmood Kasuri.Gas Pipeline Projects in South Asia 69 looking into various aspects of the gas pipeline project." he said. capable of leading the Muslim world to socio-economic development.pk/thenews/jun2005-daily/06-06-2005/main/main3. The News.

186 kilometres. both countries will take up this project at the highest level during Musharraf’s visit and substantial progress is likely. Pakistan will be facing a gas shortage by 2008 because of increased economic activity in the country and wants to import regular gas and LNG to increase the growth rate of 7 to 8 percent. but Qatar is willing to provide 1. noting that these relations have been continuously reinforced since the formation of the Pakistani government. The president will be visiting Middle East countries from June 4 to 8. Qatar and Turkmenistan. and have also asked Pakistan to follow suit.70 IPRI Factfile The Pakistani president commended relations linking his country to Qatar and described them as brotherly and built on the ground of reciprocated interests.6 bcf gas per day.com. Daily Times. Islamabad wants 2 billion cubic feet (bcf) gas per day. during the visit of then Second Deputy Prime Minister of Qatar and Minister for Energy Abdullah Bin Hamad AlAttiyah to Pakistan. Pakistan and Qatar had earlier constituted a Joint Technical Committee (JTC) on February 14. However. because of Tehran developing nuclear capabilities. Negotiations so far claim the initial gas flow will be 1. with one intermediate compressor station at Diba in the United Arab Emirates.dailytimes. but no progress has been made so far.arabicnews.600 mmscf per day and the delivery point in Pakistan is Jiwani near Gwadar.pk/default. The JTC meeting to finalise the technical and legal issues of the proposed gas has yet to be held. Pakistan and Qatar have long been negotiating the proposed project. 6 July 2005 <http://www. Pakistan is not in a position to further delay its decision to choose the project among the three proposals of gas pipelines from Iran. The United States has already asked India not to import gas from Iran.88 billion Gulf-South Asia Pipeline (GUSA) gas project from Qatar to Pakistan and the import of Liquefied Natural Gas (LNG) will be discussed during President General Pervez Musharraf’s visit to Qatar on June 4. 9 August 2005 <http://www. The total length of the GUSA pipeline is 1.html> M USHARRAF WILL D ISCUSS G AS P IPELINE WITH Q ATAR ISLAMABAD: Progress on the proposed US$1.asp?page=story_4-6-2005_pg7_29> . The Pakistani president also commended the solid relations linking his country with the Gulf Cooperation Council member states and the Arab states in general.com/ansub/Daily/Day/050607/2005060707.

Possible? Yes. So. the other from Turkmenistan through Afghanistan and Pakistan. Putting energy security before conventional security. India's GNP will grow at maybe 7 per cent annually in the next 20 years. Both countries will import energy through the same pipelines. First. Besides. Jehadi groups can cut the pipelines even if the governments of Afghanistan and Pakistan are supportive. The Defence Ministry no longer has a veto on the ground that Pakistan will control India's energy pipeline. just as ULFA militants do in Assam. To do that.Gas Pipeline Projects in South Asia 71 V. Normally onshore pipelines are cheaper than offshore pipelines or tankers carrying liquefied natural gas (LNG). and the cost of stand-by guarantees. The hope is that the pipelines will bind the countries together in a new partnership. Yet today India seeks to make China an energy security partner. But cut pipelines can be repaired in one to three days. Remember. reducing tensions and actually improving conventional security. why not . Provided we have 15 days gas in reserve storage. But pipelines through Pakistan will entail heavy transit fees as well as insurance cover against interruptions. stand-by supplies through tankers will be guaranteed by Iran. India suddenly views Pakistan as a potential partner. Estimates of transit fees payable to Pakistan range from $80 million to $700 million a year. Nor will the external affairs ministry insist any more on a quid pro quo from Pakistan (such as most favoured nation treatment for Indian exports). To overcome these costs. C HINA ’ S I NTEREST I N T HE G AS P IPELINE I N S OUTH A SIA P EACE P IPELINE TO C HINA ? Energy has converted India's traditional foes into energy allies. in which case energy needs may quadruple. Optimistic? Very. Baluch militants occasionally cut the Sui pipeline in Pakistan. India seeks joint bidding for oil and gas blocks globally with China instead of competing with it. Pokharan II was about attaining the nuclear capacity to bomb China. occasional jehadi explosions will not affect consumers. Techno-economic surveys need to establish that such pipelines are cost-effective. why not expand our vision to create the mother of all pipelines. the project needs to maximise scale economies. going all the way to China? The rising energy needs of Pakistan and India pale beside the gargantuan energy needs of China. More dramatic is the Cabinet nod to negotiations for two gas pipelines through Pakistan. Energy security is now an urgent issue. One will bring gas from Iran. Pakistan will lose transit fees and pay penalties if it cuts supplies or fails to repair damaged pipelines. Both will be supplied by international consortia that insist on governmental guarantees of unhindered transit. not just a foe. This explains two developments.

India and China may need to join hands in a diplomatic initiative. and its seaboard can import LNG. The biggest opposition is likely to come from outside the region.swaminomics. the Yunan-India road was one of the old Chinese silk routes. The USA is desperately trying to isolate Iran and undermine its economy. The bulk of the China pipeline will be through India. India and China. The same route could now carry gas. But Pakistan is another matter: the USA has much leverage over that country. To overcome US resistance. Dealing with so many countries is a hassle. The last thing the USA wants is a great and glorious partnership between Iran. 13 February 2005 < http://www. In security terms. That will constitute a tremendous security advantage for India. but the prospects look encouraging. The Times of India. Uzbekistan and Kazakhstan into China's Xinjiang province. The one area of China without an obvious large gas source is Yunan. the British sent supplies to their ally Chiang Kai Shek through the China road that ran from India's north east into Burma and thence into Yunan. Such a project will enable India to charge large transit fees from China.5 billion project. from George W. Pakistan will not be able to cut off supplies to India without cutting them off to China too. For that reason. The techno-economic feasibility of such a pipeline has yet to be established. west of Burma and north of Thailand.72 IPRI Factfile construct a giant pipeline from Iran through Pakistan and India into China's Yunan province. Asian natural gas industry players should come together to form an Asian gas grid. "We should look beyond a national gas grid. Indeed.htm> I NDIA W ANTS G AS P IPELINE E XTENDED TO C HINA NEW DELHI. Bush. far higher than any transit fees payable to Pakistan. The USA is not in a position to force China or India to desist from a pipeline. The Chinese heartland can get gas from Siberia. Feb 14: India said on Monday that it wants the proposed gas pipeline from Iran via Pakistan to be extended to China. In World War II." Indian Petroleum Minister . it will virtually ensure a new form of conventional security for the whole region. Pakistan. One route could be through Turkemenistan. which lies west of Burma? China has already been talking to Iran on long-term fuel supplies. Maybe we can call it the Peace Pipeline. and Xinjiang has a small population with limited energy needs.org/articles/20050213_peace_pipeline_to_china. Centuries ago. Pakistani authorities have blown hot and cold over the smaller pipeline to India. a move that could lend political security and urgency to the $4. The pipeline can become the best guarantees of peace.

Officials from the National Iranian Gas Exports Company met their Indian counterparts in GAIL. On the security of supplies. IOC and ONGC Videsh Limited. "The 21st century should be the century of gas and demand for it was rising with India and China playing a major role as the buyers of gas for their energy needs. said it would be constructed in five years' time.Gas Pipeline Projects in South Asia 73 Mani Shankar Aiyar said while inaugurating the third Asian gas buyers' summit here this morning. The officials will workout details and propose to discuss further on the Iranian Gas pipeline feasibility report. he said: "The pipeline is required by everybody. who is holding technical discussion with the Indian side on the 2775-km pipeline. Iranian representatives present at the deliberations lauded the minister's suggestion. All partners need it and this is an assurance for safe delivery.dawn. "We welcome Indian companies in the development of one of the phases of South Pars gas field. end the "wretched western dominance" and ensure energy security and economic growth in Asia. He also underlined the need for the country to look beyond only the national gas grid and called upon important Asian natural gas industry players to jointly make initiatives to harness the gas reserves for the benefit of the entire Asian region and form an Asian gas grid. Mr Rahbari." National Iranian Gas Export Company chairman M H Rahbari told reporters. . Dawn. "It is possible that Iranian gas would be made available to China by extending the proposed Iran-Pakistan-India pipeline to South China." Mr Aiyar said. 15 February 2005 <http://www. He said demand in Asian region was rising as India and China were turning major buyers of gas. Mr Aiyar said the Asian gas grid would enable the countries in the region to maximize the gains. Mr Aiyar defended the proposal to establish an Asian gas grid as the region had more than 55 per cent gas reserves. The two countries also began preliminary discussions on Monday for a proposed pact for the pipeline they are expected to sign in Teheran in June. which it had done a few years ago." Jawed Naqvi." he said.com/2005/02/15/top9.htm> E XPANSION OF I NDIA -I RAN -P AKISTAN G AS P IPELINE C HINA – A S TRATEGIC A SIAN P LAY TO India today proposed to extend Iran-Pakistan-India gas pipeline to China and sought greater collaboration between Indian and Chinese oil majors to build energy security for two of the world's most populous and energy-thirsty nations.

is proposed to travel through the heart of India and into Myanmar via Bangladesh and than travel to China. despite fierce US opposition to the involvement of Iran. the ministers of petroleum and gas of India and Pakistan are stated to talk in May to explore cooperation in this sector including on the issue of pipelines. for instance. President Musharraf hardly betrayed any of that in his response to a question . all these countries intend to pursue their ‘pipedreams’.indiadaily. Interestingly. 12 April 2005 <http://www.74 IPRI Factfile "There has been no separate detailed consideration of energy cooperation between India and China (but) in my interactions with Chinese officials (on sidelines of summit meeting between Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao) I raised the issue of extending IranIndia gas pipeline to south China via Myanmar." Aiyar said in an apparent reference to competing bids for overseas upstream blocks by Indian and Chinese oil majors. by Pakistan or terrorist organisations. as it were. India’s proposal to extend the Iran-Pakistan gas pipeline from India to China made its transition from loud thinking to the diplomatic arena with talks to be held this fall. Take Pakistan. there is also a possibility that we collaborate in certain places. "While market will dictate competition (between the two nations) on projects. Similarly.com/editorial/2286.asp> P IPEDREAMS T O P ROSPERITY The spotlight may not have been on energy cooperation during the recent visits of Chinese Premier Wen Jiabao and Pakistan’s President Pervez Musharraf to India but this is an issue that can fundamentally transform our relationship with these countries beyond soft borders." Petroleum Minister Mani Shankar Aiyar told reporters here. Aiyar said India and China could also collaborate in their quest for oil and gas fields abroad. Far from it. India is pursuing gas imports from Iran through an onland pipeline passing through Pakistan. would than mean the fuel supplies are also cut to China and therefore such an arrangement would guarantee greater stability to the project." "We have the option to compete or collaborate with one another to secure better deals. The calculus here is pure and simple national interest in enhancing their long-term energy security. Supply disruption to India. The 2600-km pipeline which would land in Rajasthan. one would have expected our neighbour to be somewhat more sensitive to American concerns. India Daily. At his televised breakfast meeting with editors. Normally.

add a new twist to the new Great Game. Iran thus has agreed to supply LNG for 25 years to India and for 30 years to China. this pipeline had few takers in the country. through the Baku-Tblisi-Ceyhan pipeline. Where (Pakistani and Indian) interests are involved. As if all this weren’t bad enough. Till this proposal to include China was floated by Aiyar. and that they "are ready to form an international consortium to upgrade security indices of the project" and so on. Thus. for example. India and to a much greater extent China with their growing demand for energy. he did.Gas Pipeline Projects in South Asia 75 on US pressure not to go ahead with the Iran-Pakistan-India pipeline: Why is it that 'when America sneezes. Both Indian and Chinese state-owned oil majors like ONGC and Sinopec respectively also have significant stakes in the Yadavaran oilfield. but only on key issues where its own national interest is involved. century. While the US intends to evacuate oil and gas supplies from Central Asian countries like Kazakhstan westwards as. which holds an estimated 3 billion barrels of oil reserves. Britain and Czarist Russia jostled for strategic influence in Central Asia. Angola. is also seeking to lock in long-term energy supplies with investments all over the world like Sudan. he added. But now the stakes in the Game are oil and gas supplies.' Musharraf replied in a lighter vein. But it is the Iran-Pakistan-India pipeline and its proposed extension to southwestern China that will radically transform the relationship between these countries. Iran has a major stake in looking eastwards towards India and China. South Asia catches cold?' 'I know when it sneezes. in fact. Prior to his arrival in India. And go for it. The US thus has more strategic reasons to worry about India and China than the Iran connection. including the Caspian region in which the US is jostling for control of oil and gas supplies with Russia in the 21st century version of the Great Game. both these countries have locked in long-term supplies from that country as well. according to IRNA news agency reports from Tehran. and early years of the 20th. There are no prizes for guessing what were India’s fears given the longstanding animus between the two neighbours: What if Pakistan decided to cut off supplies? There were also concerns that .300 km pipeline from Atasu in eastern Kazakhstan to Alashanku in the western province of Xinjiang. It does not sneeze at everything. Venezuela. China. like India. In the 19th. India’s petroleum minister Mani Shankar Aiyar similarly responded to questions on US’ demarche to India over the Iran pipeline. China seeks to tap into these oil and gasfields through a 1. India has been seeking to get some exploration blocks for the last seven years but indications are that it may have missed the bus unlike the Chinese. Iranian President Mohammad Khatami had a telephone conversation with the general reminding him about the subject of "gas transfer" to India. despite the US threat of sanctions. we should go for it.

This was stated by China National Petroleum Corporation (CNPC) Assistant President Liao Yongyuan in an interview here at the CNPC’s headquarters. May 3: China is prepared to join Pakistan. Pakistan would naturally be wary of shutting off the tap or resorting to blackmail if its major ally gets affected. stated that it would go ahead with the pipeline regardless of India’s participation. Myanmar and finally ending in Yunnan thus will foster mutual dependence among these countries like no confidence building measure can.76 IPRI Factfile the trans-shipment fees would fund jehadi terrorism. China has so far been on the winning side as its state-owned oil majors have more autonomy in making big-ticket investments. adding. The extension to China bids fair to allay India’s misgivings vis-a-vis Pakistan at one stroke. Pakistan.a win-win situation for all concerned. Liao said that China has already developed good partnership with Pakistan. The upside is that both India and China then might decide to work in tandem to secure their long-term oil and gas supplies all over the world -. Pakistan gets its trans-shipment fees while gas-guzzling India and China slake their thirst for more energy -. The speed with which the oil dragons close deals is indeed the envy of the lumbering Indian behemoths -. I NDIA . a southwestern region that is distant from its oilfields and ports.” he said. 22 April 2005 <http://www. China’s interests are much better served than through the alternative pipeline from Sittwe in Myanmar to Kunming in Yunnan. Extending the IranPakistan pipeline from Rajasthan across northern India and the Brahmaputra valley.exemplified in Sudan and Angola to name a few instances. I RAN : G AS P IPELINE C ONSTRUCTION CHENGDU. in turn.html> C HINA R EADY TO JOIN P AKISTAN . N. India and Iran in the construction of cross-border gas pipeline project. All of this will change with extending the pipeline to Yunnan. India and Iran in the petroleum sector and wished to cooperate with . Getting China into the equation clearly is a strategic masterstroke. Outlook India. “We are convinced that the Iran-India pipeline through Pakistan is of significant importance and will substantially benefit all three countries.energybulletin. This pipeline advances the interests of these countries into a grid of prosperity and shared future beyond soft borders.net/5632. China wishes to facilitate construction of this gigantic project.obviously a more potent ground for the US to feel concerned about than Iran. Chandra Mohan. Aiyar has been talking of cooperating with China on the oil and gas front but competition is the more accurate description of the state of play till now. Both India and China have been competing fiercely for equity oil all over the world.

petroleum and petrochemical projects and long-distance pipeline. Central Asia. pipeline construction.Gas Pipeline Projects in South Asia 77 them. “We can also cooperate in setting up gas stations along the pipeline. South America. said they had developed rich capability and experience in construction of pipelines home and abroad in the recent years. making the project a reality. Turkmenistan. it has over 150 operational teams working in over 40 countries and regions. it has undertaken a number of projects in the areas of oil and gas exploration and development. Mongolia. gas and water pipelines within China. drilling.” he added. The CNPC is currently engaged in construction of the 998-km China-Kazakhstan oil pipeline. who holds top position in Sichuan Petroleum Administration (SPA). and oil refining and petrochemical production in the Middle East.000-km of pipeline in Malaysia. —APP Dawn. Liao.dawn. Iraq. Russia. logging and downhole operations. reports Xinhua. China will have to import almost 50 percent of its oil and natural gas requirements due to the widening gap between domestic demand and production. Kuwait. and engineering project construction.com/2005/05/04/ebr12. Besides its completion of over 20. a subsidiary of CNPC. G AS R EQUIREMENTS BY 2020 Beijing. Tunis. since China being a friendly neighbouring country could be in a better position to help in implementing the project on reasonable conditions. The CNPC has accumulated rich experience in the construction of oil and gas field surface engineering. In addition. it had constructed over 3. China is estimated to consume 450 million tons of crude and 200 billion cubic meters of natural gas by 2020. May 25 : By 2020. Currently. and Sudan. president at China Oil and Natural Gas Designing Institute. and established many technical crews specialized in survey.htm> C HINA TO I MPORT 50% O IL . This could be also a step forward consolidating the mutually beneficial cooperative partnership at the regional level. The company has successfully carried out technical services in overseas countries such as Pakistan. providing services in geophysical prospecting. he added. and Sudan. said Wang Gongli. 3 May 2005 <http://www. and half of the supply would depend on imports. The construction begun in September 2004 is scheduled to be completed by December 2005. North Africa. and petroleum or petrochemical projects. design. Kuwait. He hoped this offer would be received well by the respective countries. .000-km of oil. Kazakhstan. and other regions.

8 billion cubic meters of natural gas a year.com/news.78 IPRI Factfile China produced 175 million tons of crude in 2004.php?action=fullnews&id=2537> .newkerala. According to Wang. Wang said Tuesday at an energy forum at the ongoing International High-tech Expo here. China now produces 40. and the maximal annual output could not exceed 200 million tons in the future. New Kerala Online Daily. and the gap between domestic demand and supply would reach eight billion cubic meters by 2020. 25 May 2005 < http://www.

still a large gap would remain. It 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. South Korea's Daewoo International operates and owns 60 per cent of Myanmar's gas-rich A-1 block.Gas Pipeline Projects in South Asia 79 VI. there has been a change in Indian approach towards meeting its energy needs. By linking the gas pipe line transit to many other issues. While domestic production has its limitations in spite of new gas fields in Arunachal Pradesh and Assam. there has been huge finds of gas reserves in Myanmar. Ltd. India needs huge amount of gas to meet its ever growing energy demands. the other option of obtaining gas from neighbouring countries appears to be the only way to meet the increasing energy needs. in which India's Oil and Natural Gas Corp. Bangladesh has in effect complicated the issue. But. GAIL (India) Ltd has been appointed by Myanmar as the agency responsible for marketing the gas from A1 block. Daewoo's 100 per cent-owned A-3 block is close to A-1. It is also known that pipeline is the best mode to carry this gas from the vast gas fields that have been discovered in the region and neighboring territories in recent times. holds 20 per cent stake. MYANMAR-BANGLADESH-INDIA GAS PIPELINE I NDIA -M YANMAR G AS PIPELINE P IPE T HROUGH B ANGLADESH D REAM ? For a long time now it is known in the subcontinent that gas is an economic source of energy. which could hold 6. The effort is to shift its focus from striking crude oil to natural gas. This change in strategy has necessitated greater dependence on gas to meet India’s energy needs. Though some of this demand will be met domestically. Bangladesh is a case in point.0 trillion cubic feet of recoverable gas. which is environment friendly too. while GAIL India Ltd and Korea Gas Corp each hold 10 per cent. The projected demand of natural gas in India by 2020 stands at a staggering 400 million standard cubic meters a day. . The rising demand has to be met both by increasing domestic production and importing gas India is making efforts on both the fronts. Recently. Gas from Myanmar In recent times. still some countries are not only reluctant to export their surplus gas reserves but also hesitant to allow even the gas pipeline to pass through their territory.

India would build the $1-billion 290-km gas trunkline while Bangladesh’s state-owned Gas Transmission Company would have responsibility for managing the stretch in its territory. After all. India and Pakistan are now talking cooperation. anticipates exporting natural gas from Myanmar to India. to be shared between India. given its transnational nature. The pipeline is one of the several options being considered by India for exploiting the gas reserves. The project. . an estimated 100 million US dollars per annum. which has not been properly exploited due to absence of local market. These advantages are coming to Bangladesh even when it is not investing in the pipeline nor assuming any risk involved in its construction. and involvement in the project of the Gas Transmission Company Limited (GTCL). But the issue of gas pipeline is quite complex. A recent cabinet committee brief prepared by its energy ministry underscored the pipeline's benefits to the country. Gas Pipe Line Through Bangladesh: India has been pushing for an early agreement on the Myanmar-BangladeshIndia gas pipeline proposal as there is almost no chance for it to get gas from Bangladesh. due to strong domestic opposition within the country. Bangladesh is the country which had first mooted SAARC and for this it is going to receive an award during the forthcoming 13th SAARC summit. In a situation like this it would be difficult for Bangladesh to continue with its recalcitrant approach. then via the Indian states of Mizoram and Tripura before crossing Bangladesh to Kolkata. It also wants India to agree to allow Bangladesh to use the pipeline to export its gas to India or import it from Myanmar. Initially Bangladesh was not even willing to consider this proposal. and the project jointly managed by India and Bangladesh. Mohona Holdings. Though this change in situation has resulted in Dhaka now agreeing in principle to allow the construction of pipeline. an investment of about 150 million dollars inside Bangladesh for the pipeline construction. with natural gas from Tripura also being fed into the pipeline. These include: revenue earning from granting a right of way to the pipeline. It wants the pipeline to be laid along its existing roads and highways. which may earn the company 24 million dollars per year. But things have changed to some extent after the 12th SAARC summit. Myanmar and a Bangladeshi company. wheeling charges over the gas transmission through Bangladesh.80 IPRI Factfile India has its own gas reserves in Tripura. it has also put certain conditions. The proposed pipeline would run through Arakan (Rakhine) state in Myanmar. Benefits to Bangladesh: Bangladesh stands to benefit in a number of ways by the construction of this pipeline.

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State Minister for Energy and Mineral Resources AKM Mosharraf Hossain believes that Myanmar's initiative to export gas to India through a pipeline would also ensure future energy security of Bangladesh. In the event of exhaustion of Bangladesh's gas resources the country would be able to import gas from Myanmar from its huge natural gas reserves. It may also pave the way for investment in the country's energy sector, and will lead to massive industrialization in the country. The tri-national gas pipeline is being pursued in Bangladesh by the Mohona Holdings since 1996. Recently, this company reiterated its interest, and following a discussion with state minister for energy, the Bangladesh prime minister verbally directed the energy ministry to send the proposal to the cabinet committee. But the cabinet committee on economic affairs decided that the matter should now be taken up at the highest level, that is, by Prime Minister Khaleda Zia’s office, as it looks after energy issues.

Bangladesh Puts Forth Conditions:
During the recent visit of Bangladesh Finance and Planning Minister Saifur Rahman to India the issue of gas pipeline figured prominently. Rahman who was in New Delhi to attend the India Economic Summit, had talks with the Indian Prime Minister and other ministers on the issue of transit facilities and development of tri-nation gas pipeline through Bangladesh. Bangladesh refused outright permission of road transit but agreed to consider the issue of rail transit. Regarding pipeline, Saifur wanted all the Bangladesh-India problems to be discussed with the aim of a package deal. Taking cue from New Delhi’s demand for transit routes through Pakistan and Iran, Bangladesh has said that it will consider allowing a similar pipeline originating from Myanmar provided India allows Dhaka a free trade corridor to Nepal and accompanying trade benefits. It also asked India to remove barriers that exist in trade between the two countries. A section in Bangladesh also wants India to allow purchase of cheap hydropower from Bhutan and Nepal so that the gas reserves of Bangladesh could be conserved. These new conditions have further complicated the negotiation over the laying of pipeline, as any free transnational movement through the sensitive ‘Siliguri Corridor’ may not be acceptable to India. Bangladesh is fully aware of this situation. India’s Petroleum Minister Mani Shankar Aiyar will visit Dhaka and Yangon in January to explore the possibility of laying this pipeline. The Bangladesh energy ministry has been given a go-ahead on the pipeline issue by the foreign ministry. The issue is expected to top the agenda at the trination energy ministers’ conference to be held in January 2005 in Myanmar. Here some forward movement could be expected due to the changed political situation in South Asia and also because of lead taken by the source country Myanmar in bargaining with the intermediate country, Bangladesh.

82

IPRI Factfile

There will be serious bargaining before this pipeline comes through. India would also have to consider other related costs due to the conditions put by Bangladesh. These new conditions have made the situation trickier. Meanwhile, the development in technology has provided India other options of transporting gas. This has considerably reduced the bargaining power of Bangladesh. But pipeline has its importance for regional cooperation. A decision to construct the pipeline would depend on all these. But if it materializes, it will start the process of regional economic cooperation in South Asia in a major way, which has so far been held hostage by the regional politics. India will have to look for other options too for transporting gas from Myanmar in the near term as the transit country Bangladesh is unlikely to treat the issue as purely an economic one.
Anand Kumar, 7 January 2005 <http://www.saag.org/papers13/paper1216.html>

B ANGLADESH ' S G OVERNMENT D ECIDES

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G AS P IPELINE

Bangladesh's Minister for Energy and Minerals, AKM Mosharrof Hossain, will attend an international gas pipeline conference in Rangoon, Burma. Mr Hossain's duty will be to decide on whether a gas pipeline will be built through Bangladesh. The conference will run from the 12th to the 13th of January 2005. According to a report, the meeting will be attended by the Indian Petroleum Minister, Burmese officials and Mr Hossain after Bangladesh accepted a formal invitation from Burma's military government. Burma's military government has agreed to sell its gas to India, but the government has not yet decided on the route of the gas pipeline will export to India, a local source said. The aim of the talks is to convince the Bangladesh government of the benefits of the pipeline. The construction of the gas pipeline will commence at the end of the year once the Bangladesh government agrees to let the pipeline run through its territory. Bangladesh will make annual US $125 million revenue from the gas the pipeline transports. US$ 100 million will come from a wheeling charge and US$ 25 million as maintenance charges. In addition, Bangladesh will get the right of way revenue from the pipeline and there will be an investment of US$ 150 million that will also create employment opportunities for Bangladeshi workers. The afore-mentioned facts are likely to convince the Bangladesh government to give its final approval for the gas pipeline to be constructed through its territory, the source said.

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The pipeline will cross the Bangladesh border through Brahmanbaria from the Indian state of Tripura, and it will cross into west Bengal through the Rajshahi border. In Burma, the gas pipeline will extend along the Kaladan River, which runs from the Arakan state's capital of Akyab to the Tripura state of India. The minister will fly to Rangoon on January the 11th, along with other two top businessmen including chairman of Petrobangla, a distinguished petroleum firm from Bangladesh.
Narinjara News, 7 January 2005 http://www.ibiblio.org/obl/docs3/NN2005-01-07.htm

D HAKA L AYS D OWN T ERMS

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DHAKA: Bangladesh is set to prepare a comprehensive proposal, detailing three conditions that the government of Khaleda Zia wants to be met by New Delhi before signing any memorandum of understanding for tri-nation gas pipeline from Myanmar to India through Bangladesh. Dhaka's pre-conditions include transit facilities for Bangladesh to import hydroelectricity from Nepal and Bhutan, space for Bangladesh to trade with the two Himalayan countries and reduction of trade imbalance between Bangladesh and India. The ministry of energy and mineral resources on Wednesday wrote to the Prime Ministers' Office requesting to ask three ministries concerned to prepare a position paper by three ministries - energy and mineral resources, power division and commerce ministry. "We want to push, and hold high level meeting with, Delhi on the three conditions before the signing of the gas-pipeline MoU, draft of which was prepared at the tri-nation working committee meeting," Bangladesh's state minister for energy and mineral resources, AKM Mosharraf Hossain, told reporters on Wednesday. Dhaka, Yangon and New Delhi on January 13 agreed to cooperate in a gas exploration and overland pipeline project to send gas to energy-hungry India from Myanmar through Bangladesh territory. "Based upon technical and commercial feasibility, the pipeline would be operated by an international consortium as may be agreed upon by the parties concerned," said a joint statement issued following a two-day meeting on January 12-13 in Yangon between the energy minister of Myanmar, Brigadier General Lun Thi, the Indian minister for petroleum and natural gas, Mani Shankar Aiyar, and the Bangladesh state minister for energy and mineral resources, AKM Mosharraf Hossain.

dawn. the process of negotiation faced a brief setback. AKM Mosharraf Hossain. the Dhaka's pre-conditions. on the plea that Dhaka was not prepared for the meeting. which would take at least six months. Mosharraf said that the three parties have agreed that they would engage an international consulting firm for feasibility study to identify the best possible route.htm> A IYAR W ARNS D HAKA ON G AS P IPELINE P ROJECT India would be forced to look at other options of bringing natural gas from Myanmar if Bangladesh does not cooperate in working out a trilateral agreement on the Indo-Myanmar gas pipeline. Delhi requested Dhaka to send an official proposal on the conditions. Dhaka asked Yangon for deferring a meeting of the tripartite technocommercial working committee. The meeting was deferred by 'at least a week'. after Delhi abruptly pulled out from the 13th summit of the Saarc. including injecting and siphoning off their own natural gas." "Besides. Bangladesh's state minister for energy and mineral resources. Indian energy minister. Speaking to Business Standard.com/2005/03/03/int10. 3 March 2005 <http://www. Mani Sankar Aiyar told reporters in Delhi on February 27 that the three nations would sign the MoU in March. In response. provide the two Himalayan countries with transit facilities and reduce trade gap with Bangladesh". Meanwhile. there are several other ways we could bring Myanmar gas." the statement read. which was scheduled to be held in Yangon on February 14. which was scheduled to be held in Dhaka in the first week of January. cabinet has to approve the draft MoU before signing of the understanding. Dawn. 'If Bangladesh does not cooperate in implementing the trilateral statement (signed in January). The meeting was eventually held in Yangon on February 24-25. told the press in Dhaka on January15 that "Dhaka will not sign any tripartite agreement if New Delhi does not allow it to bring hydroelectricity from Nepal and Bhutan. About the route of the pipeline.' Gail and Oil and Natural Gas Corporation have participation in two gas blocks in Myanmar." Mosharraf told reporters in Dhaka on Wednesday. Aiyar said. Nural Kabir. in principle.84 IPRI Factfile "The Governments of Bangladesh and India reserve the right to access the pipeline as and when required. India wants to bring gas reserves from Shwe field in . The meeting formulated a draft MoU. However. But his Bangladeshi counterpart believes that it is quite unlikely to be singed in March as "we want to be fully prepared on the specific proposals on conditions. which reportedly accommodated.

India had half a dozen options but was keen to involve Bangladesh since it would be good for the geo-political climate of the country. Enumerating the other options.rediff.com/money/2005/apr/20pipe. which showed that it was keen on the project. Jyoti Mukul. said Aiyar.htm> . "Whether Bangladesh is involved or not depends on whether he stick to points that are relevant and not peripheral. He said Bangladesh was keen that the memorandum of understanding for the pipeline should be signed in Dhaka. The companies are also expecting discoveries in the adjacent block A-3. "A pipeline could also be laid in the shallow waters." On land pipeline could also directly come from Tripura or Mizoram. he said gas could come as compressed natural gas or liquefied natural gas. transit and power supply from Nepal and Bhutan to be included in the trilateral memorandum of understanding. The three bilateral issues were identified by a committee of nine secretaries set up by the Bangladesh government for examining the IndiaBangladesh-Myanmar pipeline. The Indian government also cannot do much about the favourable trade balance it enjoys with Bangladesh since it was not willing to sell natural gas to India. trade and power are not within its purview. Aiyar's ministry of petroleum and natural gas is spearheading the diplomatic dialogue on the pipeline after a Cabinet approval for the same but finds it difficult to give any such assurance since the issues of transit. India allows transit to Nepal-bound Bangladesh traffic for few hours but officials said there was not enough traffic to justify increase in the number of hours. Officials said an assurance on power supply from Bhutan and Nepal to Bangladesh could not be made part of the trilateral MoU since it concerned two other countries which were not party to the document. Talks on pipeline transiting from Myanmar has got stuck with Bangladesh insisting on an assurance from India on trade. It could also be outside the shallow waters though there were technical problems in it." said Aiyar adding that there was no issue of substance that remained to be solved for the pipeline. 20 April 2005 <http://www. Pipeline through Bangladesh would be cheaper and would also help in monetising Tripura gas.Gas Pipeline Projects in South Asia 85 block A-1 in offshore Myanmar.

After the finalisation of strategy. Mosharraf Hossain told journalists that concerned ministries have been asked to examine the proposals and send those to the inter-ministerial meeting. State Minister for Energy and Mineral Resources AKM Mosharraf Hossain. Replying to a question. There was an agenda on Indian conglomerate TATA for investment of over two billion US dollar in Bangladesh as well as the demands they have made with their proposal was not discussed in the meeting. he said a resolution will be passed in the next meeting and it will be sent to the Prime Minister for her approval. Prime Minister Khaleda Zia approved a bid of the Energy Ministry to formulate an integrated strategy in consultation with the concerned ministries. and bringing electricity from the two Himalayan kingdoms. Bangladesh will invite Indian Petroleum Minister Mani Shankar Aiyar to discuss about the three conditions. and Indian corridor for its bilateral trade with Bhutan and Nepal. Conditions are 18 km corridor facilities between Nepal and Bangladesh through India. Decision was taken yesterday at an inter-ministerial meeting held at the Energy and Mineral Resources Ministry with Commerce Minister Altaf Hossain Chowdhury in the chair. attended the meeting. Tata wanted 20 years smooth gas supply for their proposed three gas-based industries. As India sought specific proposals from Bangladesh in this regard. officials concerned said. among others. Different ministries have started talks to determine Bangladesh's strategy to materialise its three conditions in exchange of giving right of way for the tri-nation gas pipeline from Myanmar to India through Bangladesh. A source told The New Nation on condition of anonymity yesterday that Bangladesh was thinking of relaxing from its previous strict position on . The inter-ministerial meeting asked the concerned bodies to prepare their respective views on the issue and submit those to the Energy and Mineral Resources Division within a week.86 IPRI Factfile T RI -N ATION G AS P IPELINE : B ANGLADESH Y ET T O Bangladesh will formally place three conditions to India on MyanmarBangladesh-India tri-nation gas pipeline. State Minister for Power Iqbal Hasan Mahmood and representatives from the ministries of Home and Foreign Affairs. After the meeting. Ministers and senior officials of the concerned ministries and departments had the first round of discussion on the crucial issue at the Energy and Mineral Resources Division Monday morning. allowing import of hydro electricity from Bhutan and reducing trade deficit between Bangladesh and India. Bangladesh wants reducing trade gap between Dhaka and New Delhi.

which formulated the concept. Myanmar and Bangladesh are expected to sign a Memorandum of Understanding to build an international consortium company for the construction of a tri-nation gas pipeline.Gas Pipeline Projects in South Asia 87 signing the tri-nation gas pipeline agreement with India. Nepal has been reeling under oil shortage. "It is expected that the three nations will very soon sign an MoU for an international consortium company which will build.shtml> I NDIA . so the import of natural gas from Bangladesh will certainly . with Bangladesh to decide on giving 'right of way' through its soil. told reporters here. While the first option was for the pipeline to go through Paltwa and Aijwal in Mizoram through Tripura and after crossing into Bangladesh through Brahmanbaria and Jessore districts before entering the Indian state of West Bengal.htm> G AS P IPELINE S TUDY The agreement to conduct a feasibility study on the extension of natural gas pipelines from Bangladesh to Nepal and Bhutan via India has generated much enthusiasm. he said there were two options for the pipeline which would go through Bangladesh. Dhaka has decided to explore this plan within its framework of "greater energy and other regional cooperation. the other envisaged a route through Bangladesh from Myanmar through Teknaf district along the coast and enter Bandgaon with other routes remaining unchanged." Ahmed said. according to Bangladeshi proponents of the project. Previously the position had been that Bangladesh would not sign the agreement if India did not agree to fulfill the three conditions." he said. May 24 (PTI) India. M YANMAR . The agreement was reached on the sidelines of the BIMSTECEC high-level committee meeting held in Dhaka. Explaining details of the project.com/artman/publish/article_18463." Ahmed said. 16 May 2005 <http://nation. own and operate the pipeline. "It would not only benefit the country but also usher in new areas of regional cooperation.allindianewspapers. "Myanmar has sent us letters agreeing to sell gas and India has agreed to buy it. <http://www. B ANGLADESH TO S IGN M O U P IPELINE P ROJECT FOR G AS Dhaka." Managing Director of Mohona Holding Ltd K B Ahmed.ittefaq.com/business-newsindia/may/business2005052406.

though a section of Bangladeshi politicians continue to oppose the export of natural gas. Now.com/kolnews. which had been looking forward to exporting natural gas to India. which have invested a lot of money in the Bangladesh hydrocarbon sector. Iran and Pakistan.kantipuronline. Bangladesh has shown its temptation to export natural gas to Nepal and Bhutan. For some years until Reliance discovered a large natural gas field in the Krishna-Godavari basin. The power sector is the single largest consumer of gas. Bangladesh. Bangladesh will export its natural gas to Nepal and Bhutan after the feasibility study. However. in other words. they will not tap natural gas resources. has now turned its attention to Nepal and Bhutan. . have made a condition that without a commitment to export. If no differences crop up between Bangladesh and India in the wake of territorial. Bhutan and Bangladesh. and India has already discovered alternatives to meet the energy demand. And India's plan to import gas from Mynamar may just be able to fulfil the demand of northeast Indian states. which could just meet the demand of Nepal and Bhutan. India had eyed on Bangladesh's natural gas to meet its demand. The international oil companies. Natural gas output accounts for about 70 percent of Bangladesh's commercial energy supply. So. This clearly explains that Bangladesh is determined to export natural gas to Nepal and Bhutan.88 IPRI Factfile reduce the burden on oil. So India must see the natural gas agreement positively and even ensure an effective and unhindered transit for trade between Nepal and Bangladesh. A total net recoverable reserve is about 16 trillion cubic feet. Bangladesh.php?&nid=42148> B ANGLADESH -N EPAL N ATURAL G AS P IPELINE S TUDIED TO BE A study is going to be conducted to find out the possibility of laying down a pipeline to transport natural gas from Bangladesh to Nepal and Bhutan. Nepal may not have access to the natural gas pipeline being talked among India. The extension of natural gas pipeline will also strengthen the economic ties among Nepal. will export a small portion of natural gas. 6 June 2005 <http://www. an official said Thursday. Besides. Bangladesh's current gas reserve of 22 gas fields has been estimated at about 28 trillion cubic feet. water or other disputes between Delhi and Dhaka. making a sub-regional trade arrangement a success. the natural gas discovered in the KrishnaGodavari basin in eastern India has reduced the urgency of importing it from Bangladesh. At present nearly 90 percent of the power generated in Bangladesh is gas-based.

but he dismissed speculation that the pipeline would also be used to export gas from Bangladesh to India." revealed Nepalese Foreign Secretary Madhuraman Acharya.stm> . Myanmar. The current areas of cooperation in the regional group are technology.Gas Pipeline Projects in South Asia 89 "We have agreed to undertake such a study.cn/200506/09/eng20050609_189365. transport and communication. The minister said that because of the high level of foreign investment and potential revenue from the pipeline. located around the Bay of Bengal. the Awami league. he said. The agreement was reached during a foreign secretary-level meeting of the Bangladesh.html> B ANGLADESH TO C ONSIDER G AS P IPELINE Bangladesh says it will consider proposals for the construction of a pipeline that would allow the export gas from Burma to India. Sri Lanka and Thailand Economic Cooperation (BIMST-EC) in Dhaka. believe that Bangladesh should not export gas to other countries until it has secured supplies for its own domestic needs.uk/2/hi/south_asia/2132229.bbc.people.co. the BIMST-EC now groups seven countries including India. Bangladesh. including the main opposition party. Myanmar and Bangladesh are rich in natural gas. Thailand. trade and investment. officials from the regional group stressed the importance of utilizing natural gas. 16 July 2002 <http://news. Nepal and Bhutan. During the meeting. who led the Nepalese delegation at a regional meeting last week. Bangladesh had no objection in principle to the project. A number of groups. India. Sri Lanka. those who favour export say the country could earn about five-hundred-million dollars a year.com. Myanmar. energy. Establish in 1997. tourism and fisheries. However. 9 June 2005 <http://english. given the increasing price of petroleum products. The Bangladeshi energy minister Mosharraf Hossain said an expert committee would assess the viability of the two-and-half billion dollar project.

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