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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

Therefore the analysts consider the gas pipelines as a significant confidence building measure. Turkmenistan-Afghanistan-Pakistan gas pipeline. Qatar and Myanmar. security. gas price.. Economic cooperation and integration will ensure prosperity and political stability. This IPRI Factfile is a collection of articles and media reports on the gas pipelines in South Asia. Some of the states surrounding the region. which are surplus in natural gas and oil. 9 August 2005 Noor ul Haq . These pipelines in South Asia are an evolving development as the feasibility issues such as cost. Besides meeting the growing energy needs of South Asian region. Turkmenistan.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. Iran. these projects will have significant economic and political benefits. These pipelines have already challenged the animosity between India and its neighbours – Pakistan and Bangladesh – as they signify enduring economic linkages between these countries. transition fee and other technical and financial matters of different pipelines are yet to be decided. 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. The projects under consideration are the Iran-Pakistan-India gas pipeline. are exploring potential markets for their natural resources. Gulf-South Asia gas pipeline and Myanmar-Bangladesh-India gas pipeline. i.e. length. 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. route.

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

The Feasibility study for the shallow water route is to be conducted by GAZPROM of Russia but they have not yet started the study. Also the engineering design of the pipeline was performed by Brown & Root of the USA. initiated and sponsored a gas import project through an offshore pipeline from Qatar to Pakistan in 1990.pk/igpp. Crescent Petroleum has completed the detailed route survey for the whole pipeline at a cost of US$ 4 million. At present the feasibility studies of different pipelines from different destination are under progress. India will weigh those options after completion of studies on different routes. At the same time SNGPL & SSGCL have constituted a working group to assess Pakistan’s requirement of imported gas. 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. BHP has completed the phase-I of the study. Crescent Petroleum and Qatari Government have been constituted to discuss gas sale agreement. Snam progetti of Italy.gov.2 • IPRI Factfile • Feasibility study for the deep sea route is being conducted by M/s. 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. <http://www. while that of overland route is being conduct by M/s BHP of Australia.php> III Qatar–Pakistan Gas Pipeline • • • • • • Conclusion • • • . It also entered into an MOU with Government of Pakistan on 17th July 2000. the Government advised the quantities of gas that need to be imported by Pakistan starting in year 2010-11. 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.mpnr. In recent exchanges with Crescent Petroleum. Crescent Petroleum International (CP) a Sharjah based company.

where energy demand is high. the Baku-Tbilisi-Ceyhan pipeline for oil producers of Georgia. The reason for all this activity is that Caspian region oil exports can reach 3. to a terminal on Pakistan's Arabian Sea coast. the United States. Both pipelines were intended to transit 700 km of wartorn Afghan territory. via Afghanistan. including Delta of Saudi Arabia. And Kenneth Dam. this project is again being seen as the most economical and commercially viable. . Iran is contacting Pakistan later this month about its ambitious Iran-India project. China has shown interest in constructing a gas pipeline from its western Xinjiang province to Turkmenistan.600-kilometer gas pipeline from Daulatabad in Turkmenistan to Multan. was expected to pump 700 billion cubic feet of gas per year. could be connected to CentGas's proposed pipelines. Hyundai of South Korea and Crescent of Pakistan. and a stabilized Afghanistan is expected to attract massive foreign investment in such projects during the reconstruction period. a leading US company. with a capacity of 1 million barrels per day. for onward supply to Pakistan and India. The exploitation of Central Asian and Caspian reserves has long been an American dream. and the Kumkol field in central Kazakhstan. was courting Afghanistan's Taleban regime to lay a 1. a high-level delegation of US Export-Import Bank. Another part of this project was a crude oil export pipeline from Chardzhou in Turkmenistan. Now the United States has shown its intention to provide Ex-Im Bank financing and OPIC political risk insurance for a commercial deal. China and Iran are gearing up their competition for oil and gas pipelines in the region. Unocal. Itochu of Japan. However.850 billion cubic feet per year by 2010. while TDA would do the feasibility studies for the projects. Trade and Development Agency (TDA) and Overseas Private Insurance Corporation (OPIC) officials are due in Islamabad to explore business opportunities. US companies had previously been working on transporting Central Asian oil and gas to Europe via Turkey. In the mid-1990s. as the oil and gas fields of Turkmenistan and Uzbekistan in the Amu Darya basin. For this. Turkmenistan and Russia was crucial.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. Gazprom of Russia. The Taleban factor forced the CentGas investors to suspend the project in April 1998. including oil and gas pipeline investment. will pay a week-long visit to Pakistan and India to discuss trade and investment. Pakistan. Azerbaijan.2 million barrels per day and gas exports 4. Kazakhstan. Deputy Secretary of the US Treasury. even discussed the modalities and financing arrangements for the US$2. Also this month. The consortium led by Unocal. as the project was called. and possibly on to India. CentGas.5 billion project. Inpex of Japan. However.

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

Pakistan now has the thirdhighest number of CNG vehicles in the world. 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. The . Nadeem Malik. they say. India.westerndefense. which is averse to any oil and gas project going through Pakistan. will benefit Pakistan.Gas Pipeline Projects in South Asia 5 vehicles from petrol to compressed natural gas (CNG). $3 billion.htm> N ATURAL G AS -C OAL . Another 250 Mega Watt Power Project at Sonda-Jherruck is being negotiated with Jiangsu Mining and Engineering Corporation of China. This. Private sector petroleum companies expect an increase in international investment in the energy sector. 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. 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.e. The Globe (Kazakhstan). Shenhua Group corporation of China has selected a Block in Thar Coal Field to set up a 3000 Mega Watt Power Complex in phases. 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. with a message for both India and Pakistan to resolve their differences peacefully. The US Treasury has announced that Dam will discuss trade and investment. 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. may end its opposition if big US companies participate. According to official sources. and almost 20% of all motor vehicles have already been converted. given the great interest in pipeline infrastructure. Investment involved in this huge power complex is estimated at $3 billion. China a trusted friend of Pakistan is coming up with huge investment in three coal-based power projects. 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.org/articles/Kazakhstan/mar02. 8 February 2002 < http://www. and they are looking forward to Kenneth Dam's visit. after Argentina and Italy.

In order to sort out this problem. Iran and Turkmenistan are still on. options are also available to import gas from Iran.e. Primarily. 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. steps are being taken for rehabilitation of existing network. To meet the gas requirements. which is eating up 30 per cent of total export earnings every year. The Minister said that Pakistan's total petroleum imports represent 41 per cent of the country's primary energy supply. if everything goes well. Qatar and Turkmenistan through pipelines. Besides Chinese investment in coal based projects. natural gas and coal reserves. 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. Negotiations between India. 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. One of the three-pipeline projects is likely to materialize. 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. 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. we would have to develop import substitutes luckily available within the country i. This programme. may help accelerating the exploration activity in Balochistan. The additional gas supply of 900 mmcfd through SSGC and SNGPL would cost about Rs20 billion. Besides optimizing the indigenous resources. additional pipelines and compression facilities. This project has a . The value of petroleum imports is estimated at $3 billion. 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. Financing for these additional supplies would be arranged through own resources and commercial borrowing. In order to save the hard-earned export receipts and to strengthen the economy. Usman Aminuddin. In order to enhance exploration programme. certain steps are underway to accelerate exploration activity in 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.

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.4. . Original recoverable reserves were 41.1 and original recovery reserves 50. This project is to be routed through Qatar to Gwadar through Arabian Sea.6 trillion cubic feet when the production was started from this source.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. 48 inches diameter and a capacity of 3 billion cubic feet daily supply. particularly in the northern region of Pakistan. Mari: currently. 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. Pirkoh: Currently having a balance of 1. having a balance of 4.2 trillion cubic feet against the original recovery reserves of 1. The minister identified the following spots for possible gas storage reservoirs: Sui: currently. 44 inches diameter and a capacity of 2 billion cubic feet daily.8 trillion cubic feet. balance 0. The third option is Qatar-Pakistan gas pipeline of 1600 kms.3 MMB Dhurnal: Balance 0. based on the availability of hydro power plants. Meyal. 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. Iran-Pakistan gas pipeline has a length of 1650 kms.3 cubic feet at the time of inception. having a balance of 2. Add reliability to gas supply.9 MMB Dhullan: fully consumed. Increase base load. Provide "Parking" capacity in respect of gas import contract obligations.1 trillion cubic feet against the original recovery reserves of 6.6 trillion cubic feet of natural gas against the original recoverable reserves of 8. Meet seasonal demand for power generation.1 MMB while original recoverable reserves were 49.

Globally speaking. equivalent to 467 million-Ton Oil Equivalent (TOE). transport (CNG) 0.559 mmcfd in 2005.755 in 2020. Fertilizer (Feedstock) 17. Gas Demand Projection The current demand for natural gas (estimated at 2. 4. 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. Pakistan Scenario Currently.785 mmcfd in 2010 and up to 5.1 per cent goes to power generation.8 IPRI Factfile Demand Energy demand grew at an annual consumption growth rate of 4. Total natural consumption during 2000-2001 was estimated at 774 billion cubic feet. 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. 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. Pakistan has 24 trillion cubic feet (TCF) of natural gas reserves i.7 per cent. Domestic consumption 18. According to new formula.9 per cent.8 per cent in the last five years and is expected to grow at a similar rate till the end of the current decade. 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. If this formula goes on almost 80 per cent of the potential .1 per cent. The decision has been taken to give a free hand to the foreign companies engaged with oil and exploration in Pakistan.875 TCF per year.6 per cent. Commercial 2. the current natural gas reserves to production ratio are estimated for next 66 years as against oil reserves estimated for next 37 years.2 per cent. the natural gas has become an obvious choice for developing economies being economically attractive and environment friendly fuel. out of the 5 per cent royalty. while demand for natural gas grew at an average of 6 per cent. Looking at various advantages. Cement 0.9 per cent while general industrial consumption is estimated at 17. The current rate of production of natural gas is 0. Fertilizer (Fuel) 5. which was so far received by the provincial governments from the oil exploring companies in the energy sector. The government has decided to do away with the royalty.e. which saves about $3 billion a year for the country.061 mmcfd in 2000) is to increase up to 3. Sector-wise break up of the gas consumption indicates 37.5 per cent.

economic and tactical.e. Talking about smuggling Aminuddin said it was an issue which was concerning both Iran and Pakistan. The project has three aspects i. has been completed. He said the talks with the ADB and other international banks should start for lining up the funds. an option which would result in substantial earning for Pakistan would be carried out by an Australian company Broken Hill. The first phase of the project. political. The other option of laying the pipeline in deep sea. 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. The end of 2002 would complete the studies on both these alternatives of the super project of gas pipeline. Aminuddin has assured Pakistan's political support for the project. He said Iran had been heavily subsidizing . We would have no objection on a pipeline for supply of hydrocarbons to India through Pakistan. 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.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. Iran Iranian Minister for Petroeluem Bijan Namdar Zanganeh. being debated for the past several years. promoting vehicular use of CNG in Iran and curbing smuggling of petrol from Iran to Pakistan. 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. would be studies by an Italian company. A Memorandum of Understanding has also been signed with his host counterpart. he said. which involved political commitment. 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. apparently capital intensive preposition. Usman Aminuddin. The pre-feasibility study on taking as pipeline through land route. Earlier Usman expressed Pakistan's strong desire to work closely with Iran on different projects in the field of oil and gas. However he said they had always supported projects of regional pipelines.

Coal—a Viable Energy Option Dewan Muhammad Yousuf Farooqui.5 billion. Wapda and gas companies were at loggerheads over the payment of outstanding dues. Short Supply Beside development of local gas infrastructure to meet the growing need of industrial and power sector. 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.5 billion which according to the WAPDA's chief was highest-ever and alarming too. . 15 mmcfd in December and 33 mmcfd in January against the requirement of 243 mmcfd of the whole system. Similarly. Provincial Minister for Industries.21 million tones of furnace oil resulting in additional cost of Rs4.10 IPRI Factfile its petroleum products and the smuggling was equally hurting them besides causing harm to Pakistan's economy. Wapda chairman complained that the SNGPL supply on daily average basis was 55 mmcfd in November. These companies. Sui Southern Gas Private Limited (SSGCL) was not supplying sufficient gas to Thermal power Stations Jamshoro and GTPS Kotri.23 million tones costing Rs2. The Chief Executive Secretariat however has always come to the rescue of the utility companies. 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. on several occasions. 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. In the power generating sector. The Wapda chairman has sought the personal intervention of the Petroleum Minister to improve gas supply for the thermal power stations. Resulting furnace oil consumption has increased and during January it touched about 0. The gas supplied during 2000-01 on daily average basis was 403 mmcd. which forced Wapda to consume 1. the import of gas gradually become imperative to respond to the economic needs of the country. had threatened to suspend gas supply to thermal power stations due to non-payment of their arrears. which were pending against the utility since long.

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.3 billion tons. Sonda—Jherruck Coal Field in Thatta District has estimated reserves of 7. 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. Thar Coal Field located in Tharparkar is spread over an area of 9000 square kilometers. Additional power demand in Pakistan by the year 2010 is estimated at 9000 MW. The New Energy Policy given by the Bush administration includes major funding for development of clean coal technology. The blocks are spread over an area of 353 sq. • • The present government has started a programme for fast track development of coal in the province of Sindh. Instead of using cheaper fuel a large portion of energy is generated by using the costliest fuel that furnace oil. Recently a Task Force has been set up for Thar coal development under direct supervision of the . In view of the expected growth in economic activity in Pakistan. Today the world gets 38 per cent of its electricity from Coal. In the Asian region 45 per cent power is generated from coal. Despite having much larger coal deposits approximately estimated at 185 billion metric tons in Pakistan.Gas Pipeline Projects in South Asia 11 Worldwide. By comparison the share of Hydro. coal will always remain the single largest source of energy for mankind. The latest technologies being used for making clean coal have made coal no longer a dirty fuel. Reserves at Thar coalfield are estimated to 175 billion tons. kilometers with 9. This is expected to increase to 60 per cent by the year 2020. the primary use of coal is power generation. In view of large reserves the world over. Three major coalfields in Sindh are: • Lakhra Coal Field in District Dadu with estimated deposits of 1.6 billion tons of coal. the electricity demand may further increase in the days to come. Four blocks in the Thar coal field have been fully investigated.64 Billion Tons is well developed and ready to maintain the supplies. Over 99 per cent of Pakistan's coal deposits are located in the province of Sindh. Gas and Nuclear sources is 17 per cent each.

10 March 2002 <http://www. a step closer to reality. The process of conversion from oil to coal has been started in the cement industry as well. Naved Hamid Senior Economic Advisor Pakistan Resident Mission Asian Development Bank 4 May 2004 Islamabad. Enhanced use of locally available natural gas and coal would certainly help producing cheaper electricity in Pakistan. specifically gas in the Asian region. Amanullah Bashar. as I ponder the ramifications of the topic at hand "Are Regional Gas Pipelines Possible". 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. The purpose of the task force is to ensure smooth implementation of coal mining and coal fired power projects.12 IPRI Factfile President of Pakistan. Pakistan Mr. 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.com/database1/cover/c2002-19. 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. Currently. The real impact of this policy would however be fruitful when the benefit is also passed on to the consumers. Chairman. 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. A sizable portion of future power demand will now be met from coal based power generators. Sindh Coal Authority is actively promoting and helping private investors to set up projects. without hindrances of political borders. However. . The government has also started a coal development programme aimed at development infrastructure in the coalfields. 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.asp > P AKISTAN O IL AND G AS C ONFERENCE 2004 ARE R EGIONAL G AS P IPELINES P OSSIBLE ? Presented by Dr.pakistaneconomist.

A Gas Pipeline Framework Agreement has been concluded among the 3 countries confirming their commitment to the Project. I would first of all like to identify some of the negative opinions prevailing against regional gas pipelines across Asia. in view of the differences. The ADB has supported a feasibility study through a grant of $ 1 million that is nearing completion. I would first of all like to talk about the Turkmenistan-AfghanistanPakistan pipeline (TAP). construct and operate the pipeline. . However. Pakistan could also be an importer of gas. 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. By 2012. Afghanistan. I wish. Over the last decade I have not heard any other argument against the idea of transnational pipelines. Pakistan's territory could be used to transmit gas from energy surplus Central Asian States. The theme of these opinions remains the same: "large political differences" will not let transnational pipelines succeed. to talk today on the topic of trans-Asia pipelines fully appreciating the fact that there are political differences in the region.5 billion cubic feet of natural gas up to India. The consortium will be responsible for the transmission of the gas and will be paid a tariff in accordance with a negotiated gas price. royalties. 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. duties or other payments will be levied for activities directly related to the Project. India will be the main importer of gas with Bangladesh and Myanmar as potential exporters. The 3 governments will provide land and free movement of goods. value added tax. therefore. The consortium will design. The Governments of Turkmenistan.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. 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. Amongst the countries in South Asia. finance. materials and personnel for the construction and maintenance of the pipeline. No taxes. can the business of supplying natural gas through pipelines traversing 2 or 3 countries. Each country will confirm the quality of gas it will use from the pipeline for its own consumption.

I will talk about some of these risks here.2 billion cubic feet per day (bcfd). This study is likely to be completed by September 2004.7 bcfd by 2020. this would substantially increase the size of the potential market.9 bcfd by 2015. While there is a market in Afghanistan and we anticipate a reasonable demand from Pakistan. There are of course risks that need to be addressed to make the project viable and successful. The Project appears feasible based on a moderate growth rate projected for Pakistan. The TAP pipeline can supply a very large quantity at competitive prices. it is also proposed to evaluate the potential for underground gas storage reservoirs in Pakistan. Pakistan and possibly India.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. Utilization of this potential will help counter unforeseen disruptions and shortages. The Project will also need confirmed markets for the gas to confirm financial viability of the pipeline. 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. Legal and Regulatory Framework: The Host Country Agreements between the partners have to be comprehensive. There are also political risks. going up to 1. In order to progress the Project the Steering Committee held a series of meetings.4 bcfd by 2015 and 2. the formation of the consortium. Similarly. This however needs to be established on the basis of further work to be undertaken by the Consultant. India.14 IPRI Factfile The TAP Project consists of a gas pipeline of about 1. Regarding the demand for gas. The final cost of the Project is estimated at $2-2. The Sixth Steering Committee Meeting held in June 2003 chose the Southern Route to be surveyed and studied in detail first. and.3bcfd by 2010 going up to 0. of course has a huge requirement. should it agree to participate in the Project. These pertain to gas supply and markets. • • The Gas Supply and Market Risks: An independent auditor needs to certify the gas reserves of the Daulatabad gas field. the gas demand figures conveyed by Afghanistan indicate a shortfall of 0. it is estimated that Pakistan's shortfall by 2010 will be 0. supplemented by some demand for Afghanistan. Under ADB's Technical Assistance for the Project.. the figures need to be firmed up.5 billion. They will need to clearly define the basic legal and regulatory framework within which the consortium will operate. the legal and regulatory framework. Two routes for the pipeline were considered. Should India at some point agree to participate in the Project. ADB has .

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

In late 1992.16 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 one singular reason often quoted is the sensitive Indo-Pak. as the combined reserves of the three gas fields are estimated at 17 trillion cubic feet (equivalent to 485 billion cubic meters). The pipeline can transport natural gas in large quantities to Japan for an extended period of time. The Project could supply 1. Japan. The recent SAARC Summit held in Islamabad. Let us first take a look at the political context in South Asia today. the proposed Sakhalin pipeline. Recently. 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. Initial supplies to Hokkaido. Again. The question here is basically whether Central Asian sources can and will present themselves as being cooperative rather than competitive. In the context of other pipelines in Asia. and win over the Asian markets. In addition there are a host of gas pipelines proposals being developed across Central Asia. In all probability this pipeline will become a reality within this decade. 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.Pakistan . It is therefore clear that there are a large number of options/projects/plans that can be developed for transnational pipelines in Asia. The Project is currently under negotiation between the Government of Pakistan and Crescent Petroleum of UAE.600-km pipeline to Pakistan. It is likely that Sakhalin 2 will look at exports to South Korea. In the context of South Asia. or are there other historical/economic/technical reasons that have possibly delayed these projects. the most quoted reason is the perceived difficulty in doing business with countries emerging from the old soviet system.6 billion cubic feet to Pakistan. are expected by 2008 with an extension of the pipeline to Tokyo in the same year.7 billion. 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. and Indo-Bangladesh relations. there have been signs of greater stability returning to South Asia. The fact that they have not yet reached fruition. 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. Korea and Japan. the thaw in India . which will deliver Qatar gas through a 1. Is this just because of political compulsions of the various countries that are concerned. In the case of exports from Central Asia. This proposal is yet to develop further.

Pakistan's estimated shortfall by 2010 is 0. Areas of sovereign domain in extraction. Suffice to say that much of the demand will come from India and the People's Republic of China. the winner will be economic growth and development. I believe that during the course of this decade some of the planned transnational pipeline proposals will come to fruition. In conclusion I would like to state that. generate income that can be used for addressing poverty. 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. . The ADB remains committed to the cause of poverty alleviation and economic growth. as an independent regulator for the industry as well as the deregulation of prices of petroleum products are examples. To this end we believe that transnational gas pipelines will play a large role in enhancing regional cooperation and contribute significantly to economic growth.4 bcfd by 2015 and 2. 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. as the country slowly rebuilds are some notable developments that augur well for the future of regional gas pipelines. In the "chicken or egg case" of whether there should be a resolution of political issues first or whether economic development will come first. there have been changes in regulatory regimes enabling freer participation by the private sector as the public sector unbundles activities it carried out previously. I believe. They will provide cheaper and cleaner energy. Secondly. 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. In the case of Pakistan. going up to 1. The natural gas share of total energy consumption is globally expected to increase from 23% in 2001 to 28% by 2005. as Pakistan's population grows and known gas reserves are steadily used up.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.2 billion cubic feet per day (bcfd). the demand for gas will steadily outpace the supply of domestically produced gas.7 bcfd by 2020. It is today the fastest growing primary energy source. Country-to-Country interactions have introduced changes in the way countries do business with each other. In the context of Pakistan. which currently have very low per capita gas consumption as compared to consumption levels in the more industrialized and developed countries.8%. The World gas scenario has changed rapidly in the last decade. the formation of the Oil and Gas Regulatory Authority. Natural gas has come a long way from being a "not-in-demand" product. ORGA. firstly. Under a moderate GDP growth rate scenario of 3.. and promote regional security.

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. <http://www. increasing the share of Gas in the Energy mix of the country to 45%.pogeepakistan. contributing more than 82% share to the 48 million TOE of energy requirement in Pakistan for the current year. 526 wells have been explored over 146.org/Documents/Speeches/2004/ms2004017. still only 18% of the population has access to natural gas. which are seriously being considered to cater to the energy requirements of the region.18 IPRI Factfile Thank you once again for inviting me to speak at this important conference. These wells have provided gas reserves of 45 TCF.adb. 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. 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.com/industry%20overview%20o&g. 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. with the demand for natural gas growing at 8% per annum. In Pakistan. In this regard. Gas production during the last five years has risen by 62% to over 3. However. the government has adopted policies to increase the share of indigenous energy resources of the country.000 km's.htm> .000 barrels per day. in the last year.000 barrels per day in the next five years. resulting in over USD 950 million of investment in the Oil and Gas industry of Pakistan. However. with a success rate of 1:3:7. < http://www. The commercial requirement of energy in the country has doubled over the last decade. This has given a new dimension to the transnational gas pipeline projects from Qatar. making Pakistan the world's 3rd and Asia's largest consumer of CNG in the transportation industry.5 BCF / day.5 million.asp> T HE 3 RD P AKISTAN O IL .000 sq km's of area. this figure is expected to increase to almost 100. With the increased exploratory and production activities in Pakistan. The total number of vehicles running on CNG has reached over 0. Iran and Turkmenistan.

except that of Iran. While the US is assiduously wooing India. both countries go on saying that they will ignore the American objections and remain committed to the gas pipeline project. 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. 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. with a rapidly expanding economy. is anxious to conclude an agreement with Iran for assured gas supplies through an overland pipeline through Pakistan.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. 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. promising to help make it a global greater power. Pakistan and India initially seemed not to have taken the American opposition to the project into their calculations. Its background is that serious 25 years old rift with the US. indeed Pakistan showed keenness to join the project. hoping for transit fees it could charge. 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. with the latter trying to isolate Iran. America has excellent relations with both India and Pakistan. a named member of Bush’s Axis of Evil. Although this has actually diluted the enthusiasm considerably in the original Indo-PakistaniIranian gas pipeline. India. Needless to say all of ME oil is under tight US control. But India’s Petroleum Minister Mani Shankar Aiyar visited Islamabad last week and persuaded Pakistan to endorse the IndoIranian deal. The idea of this gas pipeline originated in Iran for both political and commercial reasons. It raises questions. The US has minced no words in opposing the project. Pakistan that was originally enthusiastic about this project became gradually cool toward it. Both India and Pakistan responded positively to the Iranian idea. It emerged into full view last March when US Secretary of State Condoleezza Rice termed the project as ‘not a good idea for Pakistan’. 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. America .

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

At some stage. Any US intervention in Iran will be like 15 or 20 Iraqs.com/archives/200506/P1_mbn. tenders for construction.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. Sharjah. But after what has happened in Iraq and Afghanistan (to a smaller extent). to Pakistan recently a joint working commission was established between the two countries. 13 June 2005 < http://www. Even the Iranian pipeline will have to traverse. The project is expected to begin by 2006 and be operational by 2009. Following the visit of the Indian petroleum minister. serious negotiations are afoot among the three countries. Pakistan. Nothing can be said about the future in that case. Europe and Japan will also actively enter the new Great Game in Asia to make it even more complex. west-east. . 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 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. though. if not North Korea. and India towards closer economic collaboration. The three countries are contiguous to one another. As to the future of the Iran-Pakistan-India gas pipeline (IPIP) project. and Turkmenistan.satribune. One thing is certain. The economics of Sharjah pipeline is likely to knock it out. nothing definite can be said. There is thus the crisis over Iran casts a long shadow on all the three pipelines from Iran. Mani Shankar Aiyar. In fact. The final details about gas price. The writer is a seasoned analyst who contributes to several Indian and Pakistani newspapers M B Naqvi. 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. 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. Russia and China. and routes are still to decided. though dollars alone can not decide the outcome of titanic geo-political struggles among the US. the issue is becoming so pressing that there is hardly any choice for these countries except to cooperate.Gas Pipeline Projects in South Asia 21 would primarily require the subordination of Iran at least. Notwithstanding the US opposition. the same Pakistani Balochistan.

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

dawn. by trying to block Iran’s plans and selling India nuclear technologies.proliferation policies.htm#4> . 25 July 2005 <http://www. Dawn. The province has seen political violence stemming from a strong sense of deprivation. TAP or Qatar-Pakistan projects. the US will be sending negative messages to Canada. also buy some gas besides earning royalties. it the US should engage Iran. that holds Pakistan as a “major non-Nato ally” and “strategic partner” committed to combating “international terrorism. In fact. A peaceful South Asia. Pakistan will only act as an energy “corridor state. says the US scholar George Perkovitch. Maqsud Ul Hasan Nuri. extremism and nuclear weapons. is an “economically necessary.. besides contributing to resolution in the subcontinent. Pakistan and others could persuade the US to review its opposition to the energy “linkup” plan in the region. Iran has the second largest gas reserves (after Russia) and needs to export energy resources to earn revenues.” should be interested in the latter’s sustained economic development. 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. After all. Germany. environmentally-friendly and security-enhancing initiative” that the US has long advocated. Moreover. 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 should urge both countries to exercise restraint in their words and deeds. Perhaps China. The IPI project.e. hitherto a cauldron of poverty. India. Also. in the process. Japan and others who would view this as going against its nuclear non. 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.com/2005/07/25/op.” and. it is going to be a boon for the region. The US. The building of energy grids through pipelines and the promotion of economic interdependency and interlinkages will be synergistic steps. especially of economically underdeveloped Balochistan. Hence.Gas Pipeline Projects in South Asia 23 poverty alleviation in Balochistan and Sindh. assuage its acute security concerns and give it some space.

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

and Uzbek President Islam Karimov is also on record advocating the pipeline.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. the southeast pipeline option for Caspian natural gas exports remains a distant possibility < http://www. Karzai. Negotiations by these .gov/emeu/cabs/caspgase. As early as in 1992. Until recently. during a visit to Ashgabat in January 2002. as well as sanctions imposed by the U. kept the project on hold. this pipeline option has gained some support. Since the Taliban government in Afghanistan was ousted in December 2001 as part of the U. The proposed US$ 2.doe. the pipeline was considered effectively dead. Deputy Secretary of State Elizabeth Jones. and Pakistan President Pervez Musharraf held trilateral talks on the pipeline proposal. which was close to the extremist outfit.-led war on terrorism. U. the idea of a trans-Afghan pipeline has been revived. .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. Although the trans-Afghanistan pipeline could still be built to terminate in Pakistan rather than India. This was also in the interests of the Pakistani establishment. continuing tensions between India and Pakistan make cooperation on a natural gas pipeline highly unlikely for the time being. In May 2002. but continuing fighting in Afghanistan. In fact. but with a fragile peace in Afghanistan established and the Taliban removed from power. However. However. Niyazov.S. the Argentinean oil company Bridas had won exploration rights in the Turkmen gas fields.eia. Turkmen President Saparmurat Niyazov and Afghan leader Hamid Karzai have expressed their support for the pipeline. and the United Nations on Afghanistan. but continuing instability in the region may deter potential investors. 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.Gas Pipeline Projects in South Asia 25 Arabia's Delta Oil. 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. to proceed. 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.S.long pipeline. Afghanistan and possibly India.

What are India’s fears about participating in the trans-Afghan pipeline venture? Firstly.26 IPRI Factfile opposing camps with Taliban. the international funding agencies may not be willing to make investments in the project if India’s participation is not guaranteed in it. and Afghanistan may develop its own gas fields for domestic use. While India has never taken great interest in becoming a party to the trans-Afghan pipeline project. With very low amount of hydrocarbon resources in its Strategic Energy Reserve. India has been asked to participate both as an investor and consumer. Afghanistan and Turkmenistan jointly requested India to participate in the pipeline venture. India does not also want to be caught off guard in the event of an Indo-Pak conflict. the safety of the pipeline cannot be taken for granted. The ADB has also sanctioned one million dollar technical assistance grant to undertake a feasibility study for the project. governments in Turkmenistan and Pakistan and various warlords in Afghanistan went on till the Americans attacked Afghanistan and brought about a regime change. Moreover. 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”. This time. such a fear does not need much elaboration given the kind of relationship both the countries share. Afghanistan and Turkmenistan was formed to oversee the project. India needs to carefully consider its options before taking any final decision about it. 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. given the present political situation in Afghanistan. The first phase of the feasibility study is over and the two subsequent phases are expected to take place soon. 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. The central government in Kabul does not have effective control in many regions of the country and the . Indian government is apprehensive about the safe flow of gas to India through Pakistan. In fact. Though it is true that a large part of India’s future energy needs may be met by participating in this pipeline. India does not want to give any chance to Pakistan to jeopardize its energy security. The current negotiations to construct the pipeline began in May 2002 when a Steering Committee comprising of the oil and gas ministers of Pakistan. it was always urged upon by the governments and private companies involved in the pipeline venture to participate in it. Secondly. Since Pakistan and Afghanistan are not sufficiently developed markets for Turkmen gas. the oil and gas ministers of Pakistan. after the Steering Committee of the project met in Manila on 9th April 2003.

.observerindia.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.the Afghan warlords.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. Happymon Jacob <http://www. which is Pakistan. there are even more reasons for India to be apprehensive about the trans-Afghan pipeline. through the Pakistani territory.the TAP project. Pakistan and possibly India. through the shallow waters along the Pakistani maritime boundary or through the deep Arabian Sea water. This is not the case in the TAP project. the TAP project. Third.5 billion. in the TAP project. it may not be wise to jump into the TAP project however lucrative it might look at first sight. as mentioned earlier. there is only one option. Moreover. whereas the Iran-India pipeline would have only one potential threat. The Project will take about three years to be implemented after all key decisions are taken by the cooperating countries. 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. has threats from at least three quarters .com/analysis/A020.600 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.e. Second. Al-Qaida and Pakistan. Analysts also say that AlQaida elements may still be active in the regions the pipeline would pass through. The final cost of the Project is estimated at between $2. 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. Iran was ready to reach gas to India by tankers in the event of any disruption in the flow of gas through Pakistan. Though India meets more than half its energy needs by imports. First.0 to $2. in the proposed India-Iran pipeline there were three options to lay the pipeline i. It is wiser for India to wait and see what emerges from the high profile negotiations which are going on. At least for three important reasons one would consider the abandoned Iran-Pakistan-India gas pipeline as qualitatively different from and thus better than . On the other hand. 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.

The Fourth Meeting of the Steering Committee was held on 22 February 2003 at Islamabad. The second meeting of the Steering Committee was held on 16 September 2002 in Kabul. 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. it will be a pioneering effort in linking the energy deficit economies of South Asia to the hydrocarbon rich Central Asian countries. and on the risks and mitigation measures to be adopted to improve the Project's risk profile. At its Fifth Meeting held in Manila on 8-9 April 2003. to play the role of a development partner and help with the feasibility study for the Project. This has very long term and . They have established a Steering Committee of Ministers of oil and gas from the three countries for necessary follow up and supervision. The sixth meeting of the Steering Committee will be held in Ashgabat during 19-20 June 2003. the Steering Committee approved the report on the market study conducted for sale of Turkmen gas in Pakistan and Northern India. M/s Penspen of UK. The Project has significant potential for enhancing stability and improving living standards in South and Central Asia. Pakistan and Turkmenistan met in Islamabad on 29-30 May 2002 to announce the formation of a coalition for implementing this Project. The Committee also conveyed its "no-objection" to accepting a Technical Assistance from ADB for conducting the feasibility study on the pipeline. If successful. who have been appointed as the consultants for conducting the feasibilities under the ADB-funded TA. The three Ministers signed a joint letter inviting India to join in the Project. during its first meeting held in 9-10 July at Ashgabat. At that meeting. The Framework Agreement was subsequently signed by the Heads of State in Ashgabat on 27 December 2002. were introduced to the Steering Committee. 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. on the basis for pre-qualifying private sector companies interested in leadership of the pipeline consortium. ADB was requested by the Steering Committee. ADB has committed to provide resources to undertake the full feasibility study and complete such a study by October 2003.28 IPRI Factfile The Heads of State of Afghanistan. At the third Steering Committee meeting held in Ashgabat. wherein a decision was taken to invite India to join the group. Decisions were also taken on the project structure. The Committee also approved the pre-qualification documents and authorized ADB to commence the prequalification process. 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.

org/Documents/Articles/AFG/afg_2003001. which has financed a feasibility study for the project. 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. The Asian Development Bank (ADB). would involve the construction of a pipeline about 1. < http://www. security aspects and the investment climate in the region. ADB is fully cognizant of the risks attached to this Project. TAP is designed to transport natural gas from the Dawlatabad fields in Turkmenistan through Afghanistan into Pakistan and eventually to India. These risks pertain to the techno-economic viability of the Project. including TAP.Gas Pipeline Projects in South Asia 29 widespread positive implications for these two regions." While Turkmenistan has yet to submit a certification of its Dawlatabad gas reserves. First envisaged in 1991. excluding the pipeline's possible extension to India. However. But even if New Delhi and Islamabad come to a full agreement on the project. these challenges will be addressed. . 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. these risks can be seen as challenges that have to be faced to make the Project successful. mostly through Afghan territory. The initial phase of the project. According to a 14 February report by "International Oil Daily. has estimated that the Turkmenistan to Pakistan section of the pipeline would cost between $2 billion-$2.asp> A NALYSIS : P IPELINES OR P IPE D REAMS ? The on-again. and Kabul's enthusiasm remains at current levels.adb." ADB officials have confirmed that the TAP pipeline is "economically and financially a viable project. which is a primary mandate of the organization. and these are considerable.700 kilometers in length. The Project reflects the essence of ADB's approach towards Regional Cooperation. a multitude of other problems could render the pipeline no more than a pipe dream. TAP was not deemed a profitable undertaking. 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.5 billion and would require four years of construction after all decisions are taken by the cooperating countries and international financial institutions. We are confident that with necessary political will on part of participating countries. Without the Indian market. 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.

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

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

A tripartite meeting. and the Kremlin can be expected to safeguard its interests. rendering the dream of riches for Kabul and peace and energy for New Delhi and Islamabad a mere pipe dream. Moscow could increase its leverage over a potential TAP participant. the Yukos production asset state-owned Rosneft recently plucked from the ruins of erstwhile oil oligarch Mikhail Khodorkovskii's empire.rferl. Should India cement its links to big state-owned players in Russia's energy industry. A FGHANISTAN A GREE M ULTI ." India. ONGC has also been conducting talks about the possibility of acquiring a stake in Yuganskneftegaz. 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. An anonymous oilindustry source told RBC on 18 January that the Russian gas company Itera.html> P AKISTAN . 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. is likely to take a dim view of any alternate export routes for Turkmenistan. might have disassociated itself from the project because it "was not supported by Russian authorities.org/featuresarticle/2005/2/83E13251-DE33-4A99-896B810AAFE277FA.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. which at one point considered involvement in TAP. 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.32 IPRI Factfile Gazprom. 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. T URKMENISTAN . Turkmen Oil and Gas Minister Amangelgi Pudakov assured the meeting to provide the verification certificate within a month. (ONGC) and Gazprom to cooperate on natural-gas extraction projects in both Russia and India. 18 February 2005 < http://www. now drawing attention with its interest in TAP. chaired by Prime Minister Shaukat Aziz. and specifically Gazprom.BILLION D OLLARS G AS PIPELINE ON Pakistan. Amin Tarzi and Daniel Kimmage. . The 1. 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. Reuters reported.

html> .1.de/southasia/pakistan/1.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. Experts observe the project could ultimately be extended to India as well where energy requirements are increasing by 27 percent annually. “The project will create linkages. 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. Pakistan and Iran had recently agreed to speed up work on the gas pipeline project with the possibility of India also joining. interdependence and promote people to people contact which would help improve ties and strengthen regional cooperation. Security Concerns Saddiq assured to ensure the safety of the pipeline with the help of the donor agencies and the international community. 13 March 2005 < http://www2.” Aziz said. The ADB had financed the 1.dw-world.” Pakistani Petroleum Minister Amanullah Jadoon told reporters after the meeting also attended by Afghan Minister Engineer Mir Mohammad Saddiq. Pakistan Also Pursing Other Options Prime Minister Aziz said Pakistan was also looking for various other options including overland gas supply from Iran.DE. A team of Pakistani experts will visit the site shortly to conduct some technical and geological checks.3 million US dollars pre-feasibility report on the project. Aziz said the project could be an important confidence building measure (CBM) between Pakistan and India. however. The pipeline will travel nearly 500 kilometers through Afghanistan. “This is good news for all the three countries. allaying a major concern of the planners in the wake of the security situation in the war-torn Afghanistan. DW-World. undersea gas from Qatar and Liquefied Natural Gas (LNG). which initially showed reluctance to join over security concern.133266.

adding that the country had to work simultaneously on pipeline projects from Iran and Qatar. The long-delayed project envisages a $3. as the minister said. "It is more feasible. because there are no mountains there. April 12: Pakistani. the size of Turkmen gas reserves and security in volatile Afghanistan. it would improve considerably." he said. too. 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." Jadoon told reporters after the ministers met in Islamabad. but Pakistan wants to be sure about that. 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.com/2005/04/13/top9." he said.dawn. "They are clearing the land mines and. despite security problems.600-km pipeline running through Afghanistan to Pakistan. -Reuters Dawn. " he said. the one from Kandahar.3 billion 1. .7 trillion cubic metres.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. that there is a lot of improvement in the situation over there. Turkmen and Afghan ministers met on Tuesday to discuss a multi-billion gas pipeline. "The Afghan minister has given quite some surety and it appears to us. making it the world's fourth largest gas field. "It is our compulsion. 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. He said the route of the Turkmen pipeline had also been discussed. 13 April 2005 < http://www.34 IPRI Factfile G AS P IPELINE T ALKS B EGIN ISLAMABAD. Pakistan's Petroleum Minister Amanullah Khan Jadoon said progress was being made in this direction. Afghan officials want India to join the project but Indian officials have shown only cautious interest. According to Turkmen estimates Daulatabad has reserves of 1. providing Kabul with transit revenue and Pakistan with much needed energy.

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

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

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

com/2005/0513/p05s01-wosc." says Mary Louise Vittelli. Estimated cost of the project is US$1. and whether Afghanistan is safe enough. then the deal is broken. The next round comes in July. [Y]ou can have all the security you want. analysts says. with a 640 kilometres extension to India under consideration. so security is a question. the project that has the backing of Washington would constitute another big disappointment for the Islamic Republic of Iran that considers itself -. but if the price is five times higher than getting gas from Qatar.html> P AKISTAN A ND T URKMENISTAN P USHES W ITH G AS P IPELINE ISLAMABAD 16TH May. Both countries attach great importance to early completion of this project. 13 May 2005 <http://www. an adviser to the Afghan Ministry of Mines and Industry." Scott Baldauf. Pakistani diplomats said.464 kilometres. 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. There are lots of pipelines in countries where there is war. Pakistan. The proposed 1.and rightly though -. "We need to know if there is enough gas for the next 30 years. Turkmenistan government.38 IPRI Factfile much gas Pakistan needs. 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. which will comprise American UNOCAL.csmonitor.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.as the "natural" transit route for the transit of Turkmenistan and other Central Asian energy reach nations to world outlets. (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. but not a deal breaker. Delta of Saudi . Turkmenistan had signed the deal with a consortium. If approved. in competition with neighbouring Iran and India. 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. which has been delayed since 1998 by unrest in Afghanistan. "The biggest question is certification of gas reserves in Turkmenistan.

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

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. 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 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. "During the meeting. 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. 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." said the statement. These options were discussed here on Wednesday at a meeting between oil and gas ministers of Iran and Pakistan. it is learnt. sources said. 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.40 IPRI Factfile III. the sources added. 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. . 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. 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.

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.dawn.htm > I RANIAN M INISTER I NVITED TO D ISCUSS P IPELINE P ROJECT : S AARC E NERGY M INISTERS ' C ONFERENCE ISLAMABAD. Mr Aziz also expressed happiness over India's agreement to join the pipeline plan. Dawn. he said: "In order for us to ensure such a fast and constant growth." he said. we need a reliable source for energy supply.dawn. . we hope that this significant project will be operational as soon as possible. Iran has also offered to enter into some formal agreement with Pakistan to sell specific quantities of gas. 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. Iran has indicated a price at the Pakistan border at $2 per mmbtu which Pakistan understands could be negotiated to a reasonable level. "This development will build a very good atmosphere for improvement of relations among all the region's countries. Referring to Pakistan's growing economy. 23 February 2005 < http://www. 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.htm/> G AS P IPELINE D IPLOMACY TO P ROMOTE P EACE : A ZIZ TEHRAN." -AFP Dawn. 6 January 2005 <http://www." 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. Under the Iran-to-Pakistan project. the state news agency IRNA reported. Feb 22: Prime Minister Shaukat Aziz said here on Tuesday that 'pipeline diplomacy' would bring peace to the region. Iran will bring its gas to the Pakistan-Iran border from where Pakistan will lay its own pipeline to its load centres.com/2005/01/06/ebr1. "Fortunately with the agreement of the Indian government.com/2005/02/23/top4.

Qatar and Iran for gas imports and decision would be made on the basis of lowest gas delivery price in Pakistan. Petroleum Minister Amanullah Khan Jadoon told newsmen.htm> O IL N EEDS C HANGE S TRATEGIC F ACE OF A SIA Washington. Secretary petroleum ministry Ahmad Waqar said Pakistan was simultaneously holding discussions with Turkmenistan. 1 March 2005 < http://www. Sources said no such a big pipeline project in the world has ever been completed without the involvement of the US.dawn. French and Indian companies could join together to form a consortium for the project. 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. He said Iranian oil minister has also been invited to take advantage of the occasion and hold tri-lateral discussions. Speaking at a news conference. However. 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. 3 (UPI) -. 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. 21. Mar. DC. On Feb. "The Indian government's recent approval of the gas pipeline has created an encouraging atmosphere for pushing ahead this highly important project.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. 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. the UK or Japanese companies. Dawn. which no doubt would have a positive impact on regional .com/2005/03/01/top5. other sources said it was yet to be seen whether Russian. Responding to a question.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. Iranian Foreign Minister Kamal Kharrazi announced that India was considering joining a proposed gas pipeline project stretching from Iran to India through Pakistan.

724 miles across southwest Asia. Iran will enter into a pact with India for delivery of natural gas at Indian borders.5 million tons of liquefied natural gas. Mengal said: "Whether or not India joins the project. a year for 25 years. while the second would be between Iran and Pakistan on how the gas is to be transported to the Indian border. Mani Shankar Aiyar. and 472 miles of it would cross Pakistan.000 barrels of crude oil a day to China for the next 25 years at market prices from its giant Yadavaran field." "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." According to Mengal." Kharrazi said." India's Petroleum Minister. the creation of new job opportunities." 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. But if the project goes through. 21 speech described that deal as "one of the most significant results of the strategic agreements reached by the two countries so far. And he said that Pakistan had little concern over the liquefied natural gas deal between Iran and India." According to Aiyar. India may agree on laying the pipeline from Iran via Pakistan up to India's territory. In the first one. Pakistan appears eager to play ball with the project.000 barrels of oil per day from them. India agreed to participate in developing Iran's oil fields and extracting some 100. 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. 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. Kharrazi in his Feb. Iran is committed to supply 150. or LNG.Gas Pipeline Projects in South Asia 43 convergence. In return. "The lower cost of the piped gas. a strong supporter of boosting energy links with Iran. . Aiyar said: "There will be two sets of bilateral agreements. stating. "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." the Iranian foreign minister said. it will have far-reaching geo-strategic implications for all three countries. 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. hopes that agreement on the gas pipeline deal will be finalized when he visits Tehran in June. Under that deal. 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. Pakistan will continue efforts for its realization. "It (the deal) has nothing to do with the proposed gas line project. The pipeline would extend 1.

Nor was the Indian deal with Iran done behind China's back. In any case. as well as from eight nations in the Organization of Petroleum Exporting Countries to try and create a new "Organization for Oil Importing Countries.. or at least reduced to more realistic ambitions. 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. 3 March 2005 <http://washtimes. Also. 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 -." It remains to be seen if such an organization can be created. On Jan. Washington Times.of oil and gas to avoid a potentially dangerous energy rivalry getting out of control.S. let alone Japan. And having the friendship and energy dependence of China and India will clearly be a crucial counterweight to the current U. India's crucial need for Middle East oil.44 IPRI Factfile The emerging natural gas deal with India does not appear -. in India's case. 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.and other sources -.as yet -to be remotely on the same scale. 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.htm> . as a potential ally against the Muslim Middle East should be discarded. let alone against China. 6. Aiyar played host to an "energy summit" of petroleum ministers from China.com/upi-breaking/20050303-112309-2253r. South Korea and Japan. 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. 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. 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.-Iranian situation. whether it will be able to defuse and harmonize the ever more ravenous energy needs of India and China.

"We have communicated to the Indian government our concerns about gas pipeline cooperation between Iran and India. Secretary of State Condoleezza Rice is visiting India and Pakistan. in which India must pay for the agreed amount of gas even if it does not take delivery of it. and Iranian Foreign Minister Kamal Kharrazi said the pipeline would be 2.700 kilometers long. but Aiyar's suggestion that the deal could fall through comes at the same time that U. One of the biggest potential customers so far is India. and negotiations for a pipeline stretching across Pakistan have been going on since the mid-1990s. ethane.are unwilling to pay more than $3 per MBTU. Aiyar added that India and Pakistan will need approximately 200 million standard cubic meters of gas daily. With the addition of transportation and transit charges to the Iranian price. Press Trust of India reported on 9 March. It could be a coincidence. On 16 March. Tehran.the fertilizer and power sectors -. RFE/RL reported. "We will not buy gas from Iran if we cannot sell it in India. the gas would end up costing $4. preferring instead to deliver "lean" gas that does not contain butane. Iran is keen to exploit this resource as a source of revenue. furthermore.S.5 million tons of LNG [liquefied natural gas] a year for 25 years (see "RFE/RL Iran Report.S. In late-February and earlyMarch diplomats from all three countries said a deal would be signed soon.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. A recent flurry of diplomatic visits suggested that the deal was about to be concluded. She said." 7 March 2005). but U. India reportedly prefers a "supply-or-pay" contract. in which Iran must deliver gas to the Indian border or pay for the contracted quantity. security concerns and Indian anger over Iranian business practices are putting this in doubt. and in 2002 Iran and Pakistan signed an agreement on a feasibility study for such a pipeline." Press Trust of India reported him as saying. or propane. and India would buy 7. Tehran also rejected India's request for natural gas that is rich in petrochemicals. 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]). It is therefore pursuing gas export deals with a number of countries. and Iran should offer a special price for such a large order. Aiyar said. In fact. is insisting on a "take-or-pay" agreement. whereas the main Indian consumers -.50 per MBTU. India-Pakistan tensions over Kashmir and related security concerns have delayed the project. Iran and India signed an agreement for an overland natural gas pipeline in 1993. Indian Petroleum Minister Mani Shankar Aiyar announced that his country might withdraw from the gas deal. I think our . however. she referred to the proposed pipeline during a 16 March press conference in New Delhi.

"The Financial Express" reported on 12 March. Burma could be a source of natural gas.46 IPRI Factfile ambassador has made statements in that regard and so those concerns are well known to the Indian government. Iran does not.own equity in Burmese natural gas reserves. General Electric.6 trillion cubic meters. Two Indian companies -.is another competitor for the Indian market. Indian Petroleum Minister Aiyar visited Moscow and Kazakhstan in late February to discuss energy issues.3 billion cubic meters in 2015. He reportedly said that India is willing to pay $2 billion for a 15 percent stake in Yuganskneftegaz. Qatar --with the world's third-largest natural-gas reserves (14. too.to increase production. therefore. India's cabinet recently authorized discussion of the Turkmenistan-Afghanistan-Pakistan Natural-Gas Pipeline Project (see "RFE/RL Afghanistan Report. Total. and Burmese officials have indicated an interest in running a pipeline to West Bengal in India. India produces gas and has worked with outside partners -. And Iran's Other Markets Iran natural-gas reserves is an estimated 26.4 trillion cubic meters) -.including Bechtel. according to the Energy Information Administration.5 billion cubic meters of natural gas in 2002. Gaz de France. have a stranglehold on the Indian market. Iran is eager to reach other markets. according to the Energy Information Administration. but it is looking to other countries to fulfill its requirements. and Unocal -. Ltd (GAIL) -. Most of that gas was used domestically." The timing of the Indian petroleum minister's comments suggest that New Delhi is pressuring Tehran for a better deal. He also said India could invest $25 billion in the entire Russian energy sector. although Iran did export to Armenia and Turkey. India's Other Suppliers India is a huge and growing natural-gas market. and deliveries began in January 2004. and it could be taking advantage of Rice's visit to leverage its position. 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 . but the country only produced about 76." 25 February 2005). India's Petronet and Qatar's Ras Laffan LNG Company (Rasgas) signed an agreement for the provision of 10.Oil and Natural Gas Corporation (ONGC) and Erstwhile Gas Authority of India. One idea is to connect Bangladesh's natural gas reserves with the Indian gas grid. According to the Energy Information Administration. natural gas use was nearly 25 billion cubic meters in 2002 and is projected to reach 34 billion cubic meters in 2010 and 45.3 billion cubic meters per year of LNG.

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

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

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

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

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

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

June 5: Pakistan and India on Sunday discussed wellhead gas price. “Iran does not suffer on selling gas but we both countries will be buying the gas at affordable prices. 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. 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. When asked whether the two countries had agreed to adopt a joint modus operandi for negotiating gas price with Iran." IRNA (Tehran). T RANSIT F EE D ISCUSSED I NDIA P IPELINE WITH I NDIA : I RAN TO ISLAMABAD. The Indian delegation was led by Mr Aiyar and his counterpart Amanullah Khan Jadoon led the Pakistani side. Responding to a question about the pipeline transit fee to be paid to Pakistan.Gas Pipeline Projects in South Asia 53 remunerative for Iran and affordable for India. he said both sides had agreed that the price should be affordable. cost of transmission and transit fee.irna. 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. 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. Mr Aiyar said both countries discussed the issues of wellhead prices.ir/en/news/view/line-17/0506040206122152. In this regard. he said the issue would be resolved in line with international standard practices.” he added. The two sides will continue discussions on Monday and issue a joint communiqué at the conclusion of the two-day talks. 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. Indian Oil Minister Mani Shankar Aiyar asked Islamabad to invite him to future meetings on Turkmenistan and Qatar gas pipelines. . These issues would be further discussed on Monday and future discussions would be carried out in technical meetings till these issues were resolved. 4 June 2005 <http://www.htm> G AS R ATE .

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

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

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

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

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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>

I RAN P IPELINE C ANNOT

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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

59

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>

I RAN -P AKISTAN S IGN A GREEMENT

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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.

However.asp?NewsCode=33213&N ewsKind=Current%20Affairs> D EADLINE S ET FOR F INAL P ACT ON G AS P IPELINE : P AKISTAN . 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 statement said and added: “Both the sides conveyed their serious . 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”. “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. The prime ministers of both the countries will be in Washington this month. 9 July 2005 <http://www. which have fought three wars since gaining independence in 1947 from Britain. Aiyar had also held talks with Zanghaneh in Tehran last month to discuss the deal. the Pakistani side led by Petroeleum Secretary Ahmad Waqar called on Indian petroleum Minister Mani Shankar Aiyar. Mr Aiyar also urged the two delegations to prepare a time frame in respect of various items pertaining to the project. which would also transport gas to India via Pakistan.iranmania. I NDIA P LEDGE C OMMITMENT NEW DELHI. a joint statement said. the two energy-starved countries have been engaged in a peace process and relations are at their best for years. 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.com/News/ArticleView/Default.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. Negotiations for the pipeline began in 1994 but made little headway because of tensions between Pakistan and India. officials said. Besides having substantial delegation level discussions. 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. since January 2004. The venue has not been named. To keep the other options open for their mutual quest for piped gas.

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

Dawn. the Prime Minister said India desperately needed new sources of energy. He then added: "But I am realistic enough to realize that there are many risks. because considering all the uncertainties of the situation there in Iran. 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. sanctions — a good reason not to touch the project.Gas Pipeline Projects in South Asia 63 In order to carry the process forward. Javed Naqvi. more precisely. a reference to the election of Mohammed Ahmadinejad as President of Iran earlier this month.com/2005/07/14/top4." This is. presumably. “They noted that India had been invited to attend the next meeting of the Steering Committee of the TAP Project. I don't know if any international consortium of bankers would probably underwrite this." .S. Dr. 14 July 2005 <http://www.S. the two sides agreed that the next meeting of the JWG would take place in Islamabad by the end of August 2005. to the negative reaction in Washington to the Iranian electorate's choice of a man the U. the Prime Minister has linked the riskiness of the project to "the uncertainties of the situation there in Iran.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.” the joint statement said. What the Prime Minister has done is to give international bankers — who were not exactly queuing up anyway because of the fear of U. Asked about India's discussions with Iran on the pipeline. The two sides discussed the other pipeline proposals under consideration by them — TAP pipeline and the Gulf-South Asia (GUSA) pipeline. says is a "hardliner." Whether he deliberately meant to do so or not. “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.dawn. Or. In what is another first in the Indian discourse on the pipeline. Singh's last sentence is likely to knock the stuffing out of the ambitious project's financial prospects. which is vital to India's energy security in the near to medium term.

U.S. to declare when its troops will leave Central Asia.-India defense framework took New Delhi up to the door.S." Though Dr. If the Bush administration is able to implement its commitments. 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. the key to its unlocking lay in the safeguards and test ban concessions India made. Singh himself so boldly put onto the energy and diplomatic agenda of the country earlier this year. 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. 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. All the old arguments — about becoming dependent on Pakistan.S. For another. Washington delivered on its promise of an agreement on the nuclear front. In proposing an "energy dialogue" with India when she was in New Delhi in March. his remarks to the Washington Post certainly suggest a major shift in the Indian position is already under way. safety and security — will be recycled in order to justify walking away from a project which Dr. Nuclear energy today provides barely four per cent of India's energy needs. the Manmohan Singh government itself showed a new willingness to engage with America's strategic agenda in Asia. the Indian nuclear energy sector could potentially get a boost in the short-term. wanting reverse transit rights. the unexpected election of Mr. 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. What is left now is the implementation. Secretary of State Condoleezza Rice was the first to explicitly link U.S.64 IPRI Factfile Shift in India's Stand? Taken together with Monday's deal on nuclear energy with the United States. . Singh told reporters prior to his departure from Washington on Thursday that a decision on the pipeline belonged to India. 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. paying transit fees to the Musharraf regime. For one. flexibility on the nuclear question to the Iran pipeline. Ahmadinejad has forced the Bush administration to rework its sums. 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. On Monday. Now that the grand energy `bargain' has been struck in Washington. Iran and Pakistan alone and that "outside parties" had no role to play.

at best.670km pipeline either as international banks and institutions consider it a feasible project. There is no problem of arranging funds for the 2. Some Indian concerns are also reported to be willing to finance it. it is learnt. Informed sources told Dawn on Thursday that the US concern had not made the three countries to put brakes on. A meeting presided over by Prime Minister Shaukat Aziz on Wednesday discussed Pakistan’s growing energy needs and decided to pursue . had expressed willingness to finance the project.S. “The gas project is very much on the cards and will not be abandoned. the sixth largest oil and gas producing concern in the world. Even with the most optimistic predictions.” a source close to the talks said. opposition to the pipeline is not just because of its antipathy to the Islamic regime that is in power there. Sources said that Italy’s ENI Company. Security of transit through Pakistan remains an issue but there are a number of financial and political solutions available. The Iranian project is not only vital for India's medium-term energy security. including the involvement of China as the end-point of the pipeline. Losing interest in the project — or discouraging potential investors from getting involved — is the last thing India should be doing. The Hindu.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. or even slow down. Qatar. Siddharth Varadarajan.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. it is also the key which will help us unlock the potential of a panAsian energy grid involving Central Asia and China as well. the project as talks on its various aspects were continuing. Pakistan and India are going ahead with their $4 billion gas pipeline project despite Bush Administration’s serious reservations over it. 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. 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. nuclear power will generate. July 28: Iran.globalresearch. Importing gas in liquefied form is an option but the costs are much higher. and Central Asia. 23 July 2005 <http://www. some 20 per cent of our energy needs by 2030. U. however.ca/index.

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. Doubts arose when. 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.” a source said.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.com/2005/07/29/top1. 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. in an interview with the Washington Post during his recent US trip. It is learnt that the Pakistan-India joint working group. 29 July 2005 <http://www. Two technical groups were conceptualizing the project structure with a view to making it safe. 705km in Pakistan and 850km in India. His comments. gas will come from Turkmenistan and Qatar. in view of the uncertain situation in Iran and the likely reluctance of financiers to provide funds for the project. held preliminary discussions on the proposal. He also talked . especially to the satisfaction of the Indians. Under other projects. Unlike the scepticism aired by the Indian media. which met in New Delhi recently. The three countries are expected to firm up separate consortia for building the pipeline in their territories. The pipeline would run about 1. 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. would be taken once the transaction structure developed. Pakistan would be required to invest around $1 billion to lay its part of the pipeline from the Iranian border to the India border. Dr Singh referred to the “many risks” the project entailed.dawn.66 IPRI Factfile the three proposed gas projects. A final decision. the sources said. the sources said.115km in Iran. the sources said. “Both Pakistan and Iran have assured India that there will be no security problem to the pipeline. Pakistan and India would soon appoint separate consultants to prepare structure for the formulation of consortia and other pros and cons of the project. Dawn.

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

import of LNG from Qatar to Pakistan was considered as an additional option to be pursued on parallel basis. The two leaders met here Diwan-e-Emiri soon after President Musharraf’s arrival for a two-day state visit.php> P AKISTAN .pk/Press%20Release%2062. A delegation of Qatari experts will visit Islamabad shortly to hold talks with their Pakistani counterparts for . 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. 16 February 2005 <http://www. O IL AND G AS P ROJECTS Pakistan and Qatar have agreed to cooperate in the gas pipeline project. In views of advance technological expertise of the State of Qatar in the field of LNG. 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 potential Qatari investors would be encouraged to make investment in Pakistan. The Qatari side offered to provide technical assistance in different areas of oil and gas sectors to Pakistan. of technical assistance and investment in the oil and gas. 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 .68 IPRI Factfile IV. Minister of State for Petroleum Muhammad Naseer Mengal. 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.gov. Q ATAR A GREE T O C OOPERATE I N P IPELINE . 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. LNG. 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. Abdullah bin Hamad Al-Attiya and Pakistani Minister Mr. Keeping in view of liberal investment polices of the Government of Pakistan. liquefied Natural Gas (LNG).mpnr.

Foreign Minister Khurshid Kasuri later told APP. adding that the 8.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. Investment and Privatization Minister Dr Hafeez Shaikh.pk/thenews/jun2005-daily/06-06-2005/main/main3. 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.com. The talks concentrated on the project to erect the Qatari liquid natural gas to Asia (India and China) via the Pakistani territories. 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. The president said Pakistan is facilitating foreign investors as economic activities help generate employment opportunities and therefore reduce poverty.Gas Pipeline Projects in South Asia 69 looking into various aspects of the gas pipeline project. Musharraf informed his host about Pakistan’s recent economic strides. 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." he said.3 per cent growth rate achieved by Pakistan this year ranks second only to China. saying the country needs to import gas for meeting its growing energy requirements in both agricultural and industrial sectors. They also discussed reform of the Organisation of Islamic Conference and agreed that it should be made an effective body. 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. 6 June 2005 <http://www. Welcoming President Musharraf. The two leaders also exchanged views on the Middle East situation with reference to Palestinians’ right to an independent homeland. . capable of leading the Muslim world to socio-economic development.jang. Foreign Minister Khurshid Mahmood Kasuri. "Pakistan needs more gas to further fuel and sustain higher economic growth in the years ahead. 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. The News.

during the visit of then Second Deputy Prime Minister of Qatar and Minister for Energy Abdullah Bin Hamad AlAttiyah to Pakistan. The Pakistani president also commended the solid relations linking his country with the Gulf Cooperation Council member states and the Arab states in general.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. Pakistan and Qatar have long been negotiating the proposed project. Qatar and Turkmenistan.dailytimes. both countries will take up this project at the highest level during Musharraf’s visit and substantial progress is likely. Islamabad wants 2 billion cubic feet (bcf) gas per day. The total length of the GUSA pipeline is 1.600 mmscf per day and the delivery point in Pakistan is Jiwani near Gwadar. Daily Times. 9 August 2005 <http://www. However.asp?page=story_4-6-2005_pg7_29> . The JTC meeting to finalise the technical and legal issues of the proposed gas has yet to be held. The United States has already asked India not to import gas from Iran. and have also asked Pakistan to follow suit. because of Tehran developing nuclear capabilities.com/ansub/Daily/Day/050607/2005060707.arabicnews. 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. Pakistan and Qatar had earlier constituted a Joint Technical Committee (JTC) on February 14.6 bcf gas per day.html> M USHARRAF WILL D ISCUSS G AS P IPELINE WITH Q ATAR ISLAMABAD: Progress on the proposed US$1. Negotiations so far claim the initial gas flow will be 1.88 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. noting that these relations have been continuously reinforced since the formation of the Pakistani government. with one intermediate compressor station at Diba in the United Arab Emirates. The president will be visiting Middle East countries from June 4 to 8.186 kilometres. but Qatar is willing to provide 1. Pakistan is not in a position to further delay its decision to choose the project among the three proposals of gas pipelines from Iran. but no progress has been made so far.pk/default.com. 6 July 2005 <http://www.

Both will be supplied by international consortia that insist on governmental guarantees of unhindered transit. Jehadi groups can cut the pipelines even if the governments of Afghanistan and Pakistan are supportive. Normally onshore pipelines are cheaper than offshore pipelines or tankers carrying liquefied natural gas (LNG). Baluch militants occasionally cut the Sui pipeline in Pakistan. But cut pipelines can be repaired in one to three days. just as ULFA militants do in Assam. Estimates of transit fees payable to Pakistan range from $80 million to $700 million a year. Putting energy security before conventional security. More dramatic is the Cabinet nod to negotiations for two gas pipelines through Pakistan. One will bring gas from Iran. going all the way to China? The rising energy needs of Pakistan and India pale beside the gargantuan energy needs of China. not just a foe. Possible? Yes. Pokharan II was about attaining the nuclear capacity to bomb China. the other from Turkmenistan through Afghanistan and Pakistan. So. stand-by supplies through tankers will be guaranteed by Iran. Yet today India seeks to make China an energy security partner. 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. Remember. But pipelines through Pakistan will entail heavy transit fees as well as insurance cover against interruptions. The Defence Ministry no longer has a veto on the ground that Pakistan will control India's energy pipeline. India seeks joint bidding for oil and gas blocks globally with China instead of competing with it. Provided we have 15 days gas in reserve storage. Optimistic? Very. the project needs to maximise scale economies. To overcome these costs. why not expand our vision to create the mother of all pipelines.Gas Pipeline Projects in South Asia 71 V. India's GNP will grow at maybe 7 per cent annually in the next 20 years. To do that. Besides. India suddenly views Pakistan as a potential partner. 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). and the cost of stand-by guarantees. This explains two developments. occasional jehadi explosions will not affect consumers. why not . First. Both countries will import energy through the same pipelines. Pakistan will lose transit fees and pay penalties if it cuts supplies or fails to repair damaged pipelines. Energy security is now an urgent issue. Techno-economic surveys need to establish that such pipelines are cost-effective. reducing tensions and actually improving conventional security. in which case energy needs may quadruple. The hope is that the pipelines will bind the countries together in a new partnership.

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

"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. IOC and ONGC Videsh Limited. The officials will workout details and propose to discuss further on the Iranian Gas pipeline feasibility report. end the "wretched western dominance" and ensure energy security and economic growth in Asia. 15 February 2005 <http://www. Mr Rahbari.dawn." National Iranian Gas Export Company chairman M H Rahbari told reporters. Officials from the National Iranian Gas Exports Company met their Indian counterparts in GAIL. All partners need it and this is an assurance for safe delivery." Jawed Naqvi. He said demand in Asian region was rising as India and China were turning major buyers of gas." Mr Aiyar said. On the security of supplies. who is holding technical discussion with the Indian side on the 2775-km pipeline. 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. Iranian representatives present at the deliberations lauded the minister's suggestion.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. Mr Aiyar defended the proposal to establish an Asian gas grid as the region had more than 55 per cent gas reserves. "We welcome Indian companies in the development of one of the phases of South Pars gas field. Dawn.com/2005/02/15/top9. he said: "The pipeline is required by everybody. which it had done a few years ago. "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 the Asian gas grid would enable the countries in the region to maximize the gains." he said. . 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.Gas Pipeline Projects in South Asia 73 Mani Shankar Aiyar said while inaugurating the third Asian gas buyers' summit here this morning. said it would be constructed in five years' time.

Supply disruption to India. President Musharraf hardly betrayed any of that in his response to a question . all these countries intend to pursue their ‘pipedreams’. "While market will dictate competition (between the two nations) on projects. Interestingly. India is pursuing gas imports from Iran through an onland pipeline passing through Pakistan. 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. is proposed to travel through the heart of India and into Myanmar via Bangladesh and than travel to China. one would have expected our neighbour to be somewhat more sensitive to American concerns. The 2600-km pipeline which would land in Rajasthan." Aiyar said in an apparent reference to competing bids for overseas upstream blocks by Indian and Chinese oil majors. for instance. 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. Normally. Aiyar said India and China could also collaborate in their quest for oil and gas fields abroad. At his televised breakfast meeting with editors." Petroleum Minister Mani Shankar Aiyar told reporters here. India Daily. The calculus here is pure and simple national interest in enhancing their long-term energy security.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. 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. by Pakistan or terrorist organisations. Take Pakistan. despite fierce US opposition to the involvement of Iran. 12 April 2005 <http://www.com/editorial/2286. as it were.indiadaily.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. there is also a possibility that we collaborate in certain places. Similarly. Far from it.

we should go for it. Both Indian and Chinese state-owned oil majors like ONGC and Sinopec respectively also have significant stakes in the Yadavaran oilfield. and early years of the 20th. he added. is also seeking to lock in long-term energy supplies with investments all over the world like Sudan.300 km pipeline from Atasu in eastern Kazakhstan to Alashanku in the western province of Xinjiang. which holds an estimated 3 billion barrels of oil reserves. 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. Venezuela. for example. Iran thus has agreed to supply LNG for 25 years to India and for 30 years to China. despite the US threat of sanctions. 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 . China. both these countries have locked in long-term supplies from that country as well. add a new twist to the new Great Game. 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. but only on key issues where its own national interest is involved. India and to a much greater extent China with their growing demand for energy. through the Baku-Tblisi-Ceyhan pipeline. Britain and Czarist Russia jostled for strategic influence in Central Asia. Prior to his arrival in India. It does not sneeze at everything. this pipeline had few takers in the country. Till this proposal to include China was floated by Aiyar. But it is the Iran-Pakistan-India pipeline and its proposed extension to southwestern China that will radically transform the relationship between these countries. India’s petroleum minister Mani Shankar Aiyar similarly responded to questions on US’ demarche to India over the Iran pipeline. Angola. he did. In the 19th. And go for it. and that they "are ready to form an international consortium to upgrade security indices of the project" and so on.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. But now the stakes in the Game are oil and gas supplies. South Asia catches cold?' 'I know when it sneezes. While the US intends to evacuate oil and gas supplies from Central Asian countries like Kazakhstan westwards as. Where (Pakistani and Indian) interests are involved. in fact. China seeks to tap into these oil and gasfields through a 1. Iranian President Mohammad Khatami had a telephone conversation with the general reminding him about the subject of "gas transfer" to India. like India. century. according to IRNA news agency reports from Tehran. The US thus has more strategic reasons to worry about India and China than the Iran connection.' Musharraf replied in a lighter vein. Iran has a major stake in looking eastwards towards India and China. As if all this weren’t bad enough. Thus.

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

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

Wang said Tuesday at an energy forum at the ongoing International High-tech Expo here. and the maximal annual output could not exceed 200 million tons in the future.8 billion cubic meters of natural gas a year. According to Wang.com/news.php?action=fullnews&id=2537> . and the gap between domestic demand and supply would reach eight billion cubic meters by 2020. 25 May 2005 < http://www. China now produces 40.78 IPRI Factfile China produced 175 million tons of crude in 2004. New Kerala Online Daily.newkerala.

holds 20 per cent stake. Though some of this demand will be met domestically. 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. which is environment friendly too. The effort is to shift its focus from striking crude oil to natural gas. Gas from Myanmar In recent times. while GAIL India Ltd and Korea Gas Corp each hold 10 per cent. By linking the gas pipe line transit to many other issues. But. Bangladesh has in effect complicated the issue. Ltd. still a large gap would remain. Daewoo's 100 per cent-owned A-3 block is close to A-1. Recently. the other option of obtaining gas from neighbouring countries appears to be the only way to meet the increasing energy needs. .Gas Pipeline Projects in South Asia 79 VI. GAIL (India) Ltd has been appointed by Myanmar as the agency responsible for marketing the gas from A1 block. there has been huge finds of gas reserves in Myanmar. This change in strategy has necessitated greater dependence on gas to meet India’s energy needs. South Korea's Daewoo International operates and owns 60 per cent of Myanmar's gas-rich A-1 block. 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. 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. The rising demand has to be met both by increasing domestic production and importing gas India is making efforts on both the fronts. India needs huge amount of gas to meet its ever growing energy demands. which could hold 6. there has been a change in Indian approach towards meeting its energy needs. While domestic production has its limitations in spite of new gas fields in Arunachal Pradesh and Assam. The projected demand of natural gas in India by 2020 stands at a staggering 400 million standard cubic meters a day.0 trillion cubic feet of recoverable gas. in which India's Oil and Natural Gas Corp. 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. Bangladesh is a case in point.

and involvement in the project of the Gas Transmission Company Limited (GTCL). anticipates exporting natural gas from Myanmar to India. Benefits to Bangladesh: Bangladesh stands to benefit in a number of ways by the construction of this pipeline. 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. . A recent cabinet committee brief prepared by its energy ministry underscored the pipeline's benefits to the country. and the project jointly managed by India and Bangladesh. it has also put certain conditions. It also wants India to agree to allow Bangladesh to use the pipeline to export its gas to India or import it from Myanmar. wheeling charges over the gas transmission through Bangladesh. The project.80 IPRI Factfile India has its own gas reserves in Tripura. These include: revenue earning from granting a right of way to the pipeline. Myanmar and a Bangladeshi company. 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. The pipeline is one of the several options being considered by India for exploiting the gas reserves. It wants the pipeline to be laid along its existing roads and highways. which may earn the company 24 million dollars per year. an investment of about 150 million dollars inside Bangladesh for the pipeline construction. But things have changed to some extent after the 12th SAARC summit. to be shared between India. which has not been properly exploited due to absence of local market. an estimated 100 million US dollars per annum. 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. The proposed pipeline would run through Arakan (Rakhine) state in Myanmar. India and Pakistan are now talking cooperation. with natural gas from Tripura also being fed into the pipeline. due to strong domestic opposition within the country. Mohona Holdings. After all. But the issue of gas pipeline is quite complex. Initially Bangladesh was not even willing to consider this proposal. then via the Indian states of Mizoram and Tripura before crossing Bangladesh to Kolkata. In a situation like this it would be difficult for Bangladesh to continue with its recalcitrant approach. given its transnational nature. Though this change in situation has resulted in Dhaka now agreeing in principle to allow the construction of pipeline. These advantages are coming to Bangladesh even when it is not investing in the pipeline nor assuming any risk involved in its construction.

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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

ON

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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G AS D EAL

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.

However. which was scheduled to be held in Dhaka in the first week of January. Delhi requested Dhaka to send an official proposal on the conditions. 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. Indian energy minister. on the plea that Dhaka was not prepared for the meeting.com/2005/03/03/int10. cabinet has to approve the draft MoU before signing of the understanding. The meeting formulated a draft MoU. In response. including injecting and siphoning off their own natural gas." "Besides. 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." the statement read. 'If Bangladesh does not cooperate in implementing the trilateral statement (signed in January). which would take at least six months.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. Aiyar said. Bangladesh's state minister for energy and mineral resources. AKM Mosharraf Hossain.' Gail and Oil and Natural Gas Corporation have participation in two gas blocks in Myanmar. which was scheduled to be held in Yangon on February 14." Mosharraf told reporters in Dhaka on Wednesday. after Delhi abruptly pulled out from the 13th summit of the Saarc. provide the two Himalayan countries with transit facilities and reduce trade gap with Bangladesh". Speaking to Business Standard. the Dhaka's pre-conditions. India wants to bring gas reserves from Shwe field in .84 IPRI Factfile "The Governments of Bangladesh and India reserve the right to access the pipeline as and when required. The meeting was deferred by 'at least a week'. in principle. About the route of the pipeline. Nural Kabir. Meanwhile. 3 March 2005 <http://www. 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. there are several other ways we could bring Myanmar gas. Mani Sankar Aiyar told reporters in Delhi on February 27 that the three nations would sign the MoU in March.dawn. the process of negotiation faced a brief setback. Dawn. Dhaka asked Yangon for deferring a meeting of the tripartite technocommercial working committee. which reportedly accommodated.

It could also be outside the shallow waters though there were technical problems in it. The three bilateral issues were identified by a committee of nine secretaries set up by the Bangladesh government for examining the IndiaBangladesh-Myanmar pipeline. "Whether Bangladesh is involved or not depends on whether he stick to points that are relevant and not peripheral.rediff. 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. 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. He said Bangladesh was keen that the memorandum of understanding for the pipeline should be signed in Dhaka. "A pipeline could also be laid in the shallow waters. Pipeline through Bangladesh would be cheaper and would also help in monetising Tripura gas. Jyoti Mukul.htm> . which showed that it was keen on the project. said Aiyar. 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." said Aiyar adding that there was no issue of substance that remained to be solved for the pipeline. Enumerating the other options. 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. Talks on pipeline transiting from Myanmar has got stuck with Bangladesh insisting on an assurance from India on trade. trade and power are not within its purview. 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.com/money/2005/apr/20pipe.Gas Pipeline Projects in South Asia 85 block A-1 in offshore Myanmar. 20 April 2005 <http://www. 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. The companies are also expecting discoveries in the adjacent block A-3." On land pipeline could also directly come from Tripura or Mizoram.

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. As India sought specific proposals from Bangladesh in this regard. 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. and Indian corridor for its bilateral trade with Bhutan and Nepal. allowing import of hydro electricity from Bhutan and reducing trade deficit between Bangladesh and India. officials concerned said. Conditions are 18 km corridor facilities between Nepal and Bangladesh through India. After the finalisation of strategy. and bringing electricity from the two Himalayan kingdoms. A source told The New Nation on condition of anonymity yesterday that Bangladesh was thinking of relaxing from its previous strict position on . among others. 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. Replying to a question. Tata wanted 20 years smooth gas supply for their proposed three gas-based industries. 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. After the meeting. Bangladesh will invite Indian Petroleum Minister Mani Shankar Aiyar to discuss about the three conditions. he said a resolution will be passed in the next meeting and it will be sent to the Prime Minister for her approval. 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. Prime Minister Khaleda Zia approved a bid of the Energy Ministry to formulate an integrated strategy in consultation with the concerned ministries. State Minister for Power Iqbal Hasan Mahmood and representatives from the ministries of Home and Foreign Affairs. Bangladesh wants reducing trade gap between Dhaka and New Delhi. 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. attended the meeting. 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.

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

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

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

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