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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

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

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

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

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

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

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. Another 250 Mega Watt Power Project at Sonda-Jherruck is being negotiated with Jiangsu Mining and Engineering Corporation of China. with a message for both India and Pakistan to resolve their differences peacefully. after Argentina and Italy. India. may end its opposition if big US companies participate.org/articles/Kazakhstan/mar02. they say. L EADING P LAYERS OF THE F UTURE Natural gas and coal are poised to assume a leading role in the energy sector of Pakistan under the policy focused at cutting down the import bill i. and almost 20% of all motor vehicles have already been converted.Gas Pipeline Projects in South Asia 5 vehicles from petrol to compressed natural gas (CNG). and they are looking forward to Kenneth Dam's visit.westerndefense. Nadeem Malik. According to official sources. which is averse to any oil and gas project going through Pakistan. The costly import bill for petroleum products claims almost 30 per cent of the total export earnings of the country on one hand while rendering the huge coal reserves and plentiful of natural gas reserves available within the country.htm> N ATURAL G AS -C OAL . $3 billion. given the great interest in pipeline infrastructure. 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. Shenhua Group corporation of China has selected a Block in Thar Coal Field to set up a 3000 Mega Watt Power Complex in phases. Private sector petroleum companies expect an increase in international investment in the energy sector. 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. 8 February 2002 < http://www. Pakistan now has the thirdhighest number of CNG vehicles in the world. The US Treasury has announced that Dam will discuss trade and investment. This. The . The Globe (Kazakhstan). will benefit Pakistan.e. 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. 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.

options are also available to import gas from Iran. Besides optimizing the indigenous resources. Negotiations between India. Usman Aminuddin. The value of petroleum imports is estimated at $3 billion. we would have to develop import substitutes luckily available within the country i.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. may help accelerating the exploration activity in Balochistan. One of the three-pipeline projects is likely to materialize. To meet the gas requirements. 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. Qatar and Turkmenistan through pipelines. It may be noted that about 80 per cent oil and gas potential areas are under force majeure where oil and gas exploring companies cannot operate against the will of the tribal population. Besides Chinese investment in coal based projects. This programme. This project has a . 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. Iran and Turkmenistan are still on.e. The additional gas supply of 900 mmcfd through SSGC and SNGPL would cost about Rs20 billion. which is eating up 30 per cent of total export earnings every year. if everything goes well. additional pipelines and compression facilities. 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. In order to sort out this problem. 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. natural gas and coal reserves. the gas pipeline project was designed to route through Pakistan and originally destined for neighbouring India. certain steps are underway to accelerate exploration activity in Pakistan. 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. In order to enhance exploration programme. Although the Afghanistan leaders are extending assurances for security of the Turkmenistan pipeline to be passed through Afghanistan yet this project may take some more time to materialize till the settling down of the dust in that country. steps are being taken for rehabilitation of existing network. Primarily. The Minister said that Pakistan's total petroleum imports represent 41 per cent of the country's primary energy supply.

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. Original recoverable reserves were 41.6 trillion cubic feet when the production was started from this source. The third option is Qatar-Pakistan gas pipeline of 1600 kms. 48 inches diameter and a capacity of 3 billion cubic feet daily supply. Provide "Parking" capacity in respect of gas import contract obligations. based on the availability of hydro power plants. having a balance of 4.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. Meyal.1 MMB while original recoverable reserves were 49. 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.1 and original recovery reserves 50.6 trillion cubic feet of natural gas against the original recoverable reserves of 8. Meet seasonal demand for power generation. particularly in the northern region of Pakistan. This project is to be routed through Qatar to Gwadar through Arabian Sea. balance 0. having a balance of 2.3 cubic feet at the time of inception.8 trillion cubic feet.2 trillion cubic feet against the original recovery reserves of 1.9 MMB Dhullan: fully consumed. Add reliability to gas supply.4.1 trillion cubic feet against the original recovery reserves of 6. Iran-Pakistan gas pipeline has a length of 1650 kms. 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. Mari: currently.3 MMB Dhurnal: Balance 0. . 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. Increase base load. Pirkoh: Currently having a balance of 1.

which saves about $3 billion a year for the country. Globally speaking. Looking at various advantages. If this formula goes on almost 80 per cent of the potential .7 per cent. According to new formula. which was so far received by the provincial governments from the oil exploring companies in the energy sector. 4. Cement 0.875 TCF per year. Fertilizer (Fuel) 5. the natural gas has become an obvious choice for developing economies being economically attractive and environment friendly fuel.1 per cent.9 per cent.6 per cent.559 mmcfd in 2005. 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. Commercial 2. equivalent to 467 million-Ton Oil Equivalent (TOE). Domestic consumption 18. the current natural gas reserves to production ratio are estimated for next 66 years as against oil reserves estimated for next 37 years. The government has decided to do away with the royalty. Pakistan has 24 trillion cubic feet (TCF) of natural gas reserves i.5 per cent. 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. Fertilizer (Feedstock) 17. while demand for natural gas grew at an average of 6 per cent.785 mmcfd in 2010 and up to 5.8 IPRI Factfile Demand Energy demand grew at an annual consumption growth rate of 4. Pakistan Scenario Currently.1 per cent goes to power generation. It may be noted that the local population demanding their share in the yield disallowed the oil exploration companies to carry on their operations in the tribal areas. The decision has been taken to give a free hand to the foreign companies engaged with oil and exploration in Pakistan. Sector-wise break up of the gas consumption indicates 37. out of the 5 per cent royalty.8 per cent in the last five years and is expected to grow at a similar rate till the end of the current decade. Gas Demand Projection The current demand for natural gas (estimated at 2.755 in 2020.9 per cent while general industrial consumption is estimated at 17.2 per cent. Total natural consumption during 2000-2001 was estimated at 774 billion cubic feet.e.061 mmcfd in 2000) is to increase up to 3. 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. The current rate of production of natural gas is 0. transport (CNG) 0.

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

5 billion which according to the WAPDA's chief was highest-ever and alarming too. Provincial Minister for Industries.5 billion. Resulting furnace oil consumption has increased and during January it touched about 0. 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. which were pending against the utility since long.23 million tones costing Rs2. Coal—a Viable Energy Option Dewan Muhammad Yousuf Farooqui. Sui Southern Gas Private Limited (SSGCL) was not supplying sufficient gas to Thermal power Stations Jamshoro and GTPS Kotri. 15 mmcfd in December and 33 mmcfd in January against the requirement of 243 mmcfd of the whole system. 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. These companies. The Wapda chairman has sought the personal intervention of the Petroleum Minister to improve gas supply for the thermal power stations. the import of gas gradually become imperative to respond to the economic needs of the country.10 IPRI Factfile its petroleum products and the smuggling was equally hurting them besides causing harm to Pakistan's economy. on several occasions. Similarly. WAPDA is already facing acute shortage of about 250 to 300-mmcfd gas whereas its total requirement is 703 mmcfd.21 million tones of furnace oil resulting in additional cost of Rs4. . which forced Wapda to consume 1. 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. The Chief Executive Secretariat however has always come to the rescue of the utility companies. In the power generating sector. The gas supplied during 2000-01 on daily average basis was 403 mmcd. 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. Wapda chairman complained that the SNGPL supply on daily average basis was 55 mmcfd in November. had threatened to suspend gas supply to thermal power stations due to non-payment of their arrears.

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

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

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

4 bcfd by 2015 and 2. 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. The final cost of the Project is estimated at $2-2. the legal and regulatory framework. should it agree to participate in the Project. it is estimated that Pakistan's shortfall by 2010 will be 0. going up to 1. the figures need to be firmed up. Similarly. it is also proposed to evaluate the potential for underground gas storage reservoirs in Pakistan. The Project appears feasible based on a moderate growth rate projected for Pakistan. Two routes for the pipeline were considered. While there is a market in Afghanistan and we anticipate a reasonable demand from Pakistan. There are also political risks..3bcfd by 2010 going up to 0. Utilization of this potential will help counter unforeseen disruptions and shortages. This study is likely to be completed by September 2004.700 kms that can transport upto 30 billion cubic meters of natural gas annually from the Daulatabad fields in Southeast Turkmenistan to consumers in Afghanistan. Should India at some point agree to participate in the Project.9 bcfd by 2015. and.5 billion.14 IPRI Factfile The TAP Project consists of a gas pipeline of about 1. Pakistan and possibly India. They will need to clearly define the basic legal and regulatory framework within which the consortium will operate. There are of course risks that need to be addressed to make the project viable and successful.7 bcfd by 2020. ADB has . this would substantially increase the size of the potential market. • • The Gas Supply and Market Risks: An independent auditor needs to certify the gas reserves of the Daulatabad gas field. The Sixth Steering Committee Meeting held in June 2003 chose the Southern Route to be surveyed and studied in detail first. Under ADB's Technical Assistance for the Project. the formation of the consortium. supplemented by some demand for Afghanistan.2 billion cubic feet per day (bcfd). I will talk about some of these risks here. These pertain to gas supply and markets. India. This however needs to be established on the basis of further work to be undertaken by the Consultant. of course has a huge requirement. the gas demand figures conveyed by Afghanistan indicate a shortfall of 0. Legal and Regulatory Framework: The Host Country Agreements between the partners have to be comprehensive. Regarding the demand for gas. In order to progress the Project the Steering Committee held a series of meetings. The TAP pipeline can supply a very large quantity at competitive prices. The Project will also need confirmed markets for the gas to confirm financial viability of the pipeline.

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

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

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

in the last year. Gas production during the last five years has risen by 62% to over 3. still only 18% of the population has access to natural gas. the government has adopted policies to increase the share of indigenous energy resources of the country. with the demand for natural gas growing at 8% per annum. However. Iran and Turkmenistan. The total number of vehicles running on CNG has reached over 0.000 km's. The commercial requirement of energy in the country has doubled over the last decade. 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 60.000 sq km's of area.000 barrels per day. 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. contributing more than 82% share to the 48 million TOE of energy requirement in Pakistan for the current year. increasing the share of Gas in the Energy mix of the country to 45%. which are seriously being considered to cater to the energy requirements of the region.5 million. <http://www.18 IPRI Factfile Thank you once again for inviting me to speak at this important conference. 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 a success rate of 1:3:7.htm> . < http://www.000 barrels per day in the next five years. This has given a new dimension to the transnational gas pipeline projects from Qatar. 526 wells have been explored over 146. Demand for petroleum products is expected to stay steady at 18 million tons per annum with current indigenous production of Oil in Pakistan at 60.adb. However. In this regard.asp> T HE 3 RD P AKISTAN O IL . making Pakistan the world's 3rd and Asia's largest consumer of CNG in the transportation industry.5 BCF / day.org/Documents/Speeches/2004/ms2004017. resulting in over USD 950 million of investment in the Oil and Gas industry of Pakistan.com/industry%20overview%20o&g. These wells have provided gas reserves of 45 TCF.pogeepakistan. With the increased exploratory and production activities in Pakistan. In Pakistan. this figure is expected to increase to almost 100.

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. promising to help make it a global greater power. America . with the latter trying to isolate Iran. with a rapidly expanding economy. 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. Although this has actually diluted the enthusiasm considerably in the original Indo-PakistaniIranian gas pipeline. a named member of Bush’s Axis of Evil. is anxious to conclude an agreement with Iran for assured gas supplies through an overland pipeline through Pakistan. indeed Pakistan showed keenness to join the 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. India. except that of Iran. Both India and Pakistan responded positively to the Iranian idea. Needless to say all of ME oil is under tight US control. 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. It raises questions. Pakistan and India initially seemed not to have taken the American opposition to the project into their calculations. The US has minced no words in opposing the project. 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. Pakistan that was originally enthusiastic about this project became gradually cool toward it. But India’s Petroleum Minister Mani Shankar Aiyar visited Islamabad last week and persuaded Pakistan to endorse the IndoIranian deal. hoping for transit fees it could charge. Its background is that serious 25 years old rift with the US.Gas Pipeline Projects in South Asia 19 I RAN C RISIS C ASTS S HADOW O VER A LL T HREE P IPELINE P ROJECTS IN S OUTH A SIA KARACHI. America has excellent relations with both India and Pakistan. The idea of this gas pipeline originated in Iran for both political and commercial reasons. 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. It emerged into full view last March when US Secretary of State Condoleezza Rice termed the project as ‘not a good idea for Pakistan’.

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

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

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

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

already is being developed for export to Turkey. which would run 900 miles from the Turkmen natural gas deposit at Dauletabad through Kandahar. Russian natural gas giant Gazprom bowed out of the international consortium formed to build the pipeline. with plans to become a net natural gas exporter in the near future. to Pakistan via Afghanistan or Iran In July 1997. The pipeline was estimated to cost $2 billion. in relatively remote Turkmenistan. Turkmenistan and Afghanistan agreed to reactivate the Centgas project. Kazakhstan is beginning to tap its huge natural gas production potential. as well as in Uzbekistan. Afghanistan. missile attacks on suspected terrorist training camps. The Shah Deniz field. Kazakhstan. Unocal suspended construction plans for the pipeline due to the continuing civil war in Afghanistan and the U. Southeast. However. Pakistan. and to ask the Centgas consortium. the 1999 natural gas discovery of Azerbaijan's Shah Deniz field appears to have boosted the region's natural gas export prospects. and in early August 1998. In April 1999. T URKMENISTAN -A FGHANISTAN -P AKISTAN (TAP) C ASPIAN S EA R EGION : N ATURAL G AS E XPORT O PTIONS Energy Information Administration In addition to problems related to the unresolved legal status of the Caspian Sea and several regional conflicts. In October 1997. and terminate in the Pakistani city of Multan. 1998.7 Tcf of natural gas per year via Afghanistan to Pakistan (and possibly on to India). thought to be the largest natural gas discovery worldwide since 1978. in June 1998. now led by Saudi . and Turkmenistan is seeking to boost its natural gas output. multiple routes for Caspian region natural gas exports have been proposed. and the infrastructure that will be built to deliver this natural gas has helped to renew international interest in the region's natural gas. natural gas exports from the Caspian region have been hindered by geography. This distance from markets.. Unocal set up the Central Asian Gas Pipeline (Centgas) consortium to build the pipeline. However. . has tempered interest in the Caspian region's natural gas potential. In addition. Although the infrastructure to deliver this natural gas to customers will be costly. On August 22. Unocal announced that Centgas had not secured the financing necessary to begin the work.S. The majority of the Caspian Sea region's natural gas reserves are located on the east side of the Caspian.. Pakistan.24 IPRI Factfile II. Turkmenistan signed a memorandum of understanding with Afghanistan. as well as the lack of infrastructure to deliver this natural gas to customers. and Uzbekistan to build a Central Asia Gas pipeline to carry 0.

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 pipeline was considered effectively dead. and Uzbek President Islam Karimov is also on record advocating the pipeline. This was also in the interests of the Pakistani establishment. the idea of a trans-Afghan pipeline has been revived. as well as sanctions imposed by the U. and Pakistan President Pervez Musharraf held trilateral talks on the pipeline proposal.S. but continuing fighting in Afghanistan. In May 2002. this pipeline option has gained some support. the southeast pipeline option for Caspian natural gas exports remains a distant possibility < http://www. and the United Nations on Afghanistan. However.gov/emeu/cabs/caspgase. The proposed US$ 2. which was close to the extremist outfit. to proceed. this is not the first attempt at negotiating to build this 1600 kms. Deputy Secretary of State Elizabeth Jones. 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. Until recently.eia. kept the project on hold.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. but continuing instability in the region may deter potential investors. Although the trans-Afghanistan pipeline could still be built to terminate in Pakistan rather than India. Since the Taliban government in Afghanistan was ousted in December 2001 as part of the U. Afghanistan and possibly India. the Argentinean oil company Bridas had won exploration rights in the Turkmen gas fields. U.S. . but with a fragile peace in Afghanistan established and the Taliban removed from power. 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. Turkmen President Saparmurat Niyazov and Afghan leader Hamid Karzai have expressed their support for the pipeline. However.-led war on terrorism.doe.long pipeline. during a visit to Ashgabat in January 2002.Gas Pipeline Projects in South Asia 25 Arabia's Delta Oil. In fact. Negotiations by these . As early as in 1992. Niyazov. 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. continuing tensions between India and Pakistan make cooperation on a natural gas pipeline highly unlikely for the time being.S. Karzai.

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

This is not the case in the TAP project.the Afghan warlords. Pakistan and possibly India. The Project will take about three years to be implemented after all key decisions are taken by the cooperating countries. 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. On the other hand. Happymon Jacob <http://www. whereas the Iran-India pipeline would have only one potential threat. as mentioned earlier.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. Moreover.5 billion. Third.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. At least for three important reasons one would consider the abandoned Iran-Pakistan-India gas pipeline as qualitatively different from and thus better than . Analysts also say that AlQaida elements may still be active in the regions the pipeline would pass through. . If the Indian government was apprehensive about the security of the proposed Iran-India pipeline. It is wiser for India to wait and see what emerges from the high profile negotiations which are going on.e.observerindia. Iran was ready to reach gas to India by tankers in the event of any disruption in the flow of gas through Pakistan. The final cost of the Project is estimated at between $2.0 to $2. has threats from at least three quarters . there is only one option. Al-Qaida and Pakistan.the TAP project. through the Pakistani territory. which is Pakistan. in the TAP project. Though India meets more than half its energy needs by imports. it may not be wise to jump into the TAP project however lucrative it might look at first sight.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. 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. which is to lay the pipeline through the insecure territories of Pakistan and Afghanistan. through the shallow waters along the Pakistani maritime boundary or through the deep Arabian Sea water. the TAP project. Second. there are even more reasons for India to be apprehensive about the trans-Afghan pipeline. First.com/analysis/A020. in the proposed India-Iran pipeline there were three options to lay the pipeline i.

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

security aspects and the investment climate in the region. According to a 14 February report by "International Oil Daily. 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. that can transport up to 20 billion cubic meters of natural gas annually. However. including TAP. excluding the pipeline's possible extension to India. a multitude of other problems could render the pipeline no more than a pipe dream. TAP is designed to transport natural gas from the Dawlatabad fields in Turkmenistan through Afghanistan into Pakistan and eventually to India. First envisaged in 1991.5 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. these risks can be seen as challenges that have to be faced to make the Project successful. would involve the construction of a pipeline about 1. The Project reflects the essence of ADB's approach towards Regional Cooperation.Gas Pipeline Projects in South Asia 29 widespread positive implications for these two regions. these challenges will be addressed. and based on excellent relationship between ADB and each of the four countries. which is a primary mandate of the organization. The Asian Development Bank (ADB). 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. < http://www. has estimated that the Turkmenistan to Pakistan section of the pipeline would cost between $2 billion-$2. These risks pertain to the techno-economic viability of the Project. and Kabul's enthusiasm remains at current levels. mostly through Afghan territory. and these are considerable. ADB is fully cognizant of the risks attached to this Project. . The initial phase of the project. Without the Indian market. which has financed a feasibility study for the project. 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.org/Documents/Articles/AFG/afg_2003001. But even if New Delhi and Islamabad come to a full agreement on the project.adb.asp> A NALYSIS : P IPELINES OR P IPE D REAMS ? The on-again." ADB officials have confirmed that the TAP pipeline is "economically and financially a viable project.700 kilometers in length." While Turkmenistan has yet to submit a certification of its Dawlatabad gas reserves.

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

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

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

” Pakistani Petroleum Minister Amanullah Jadoon told reporters after the meeting also attended by Afghan Minister Engineer Mir Mohammad Saddiq. undersea gas from Qatar and Liquefied Natural Gas (LNG). 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.” Aziz said. Aziz said the project could be an important confidence building measure (CBM) between Pakistan and India. “This is good news for all the three countries. Pakistan Also Pursing Other Options Prime Minister Aziz said Pakistan was also looking for various other options including overland gas supply from Iran.DE. interdependence and promote people to people contact which would help improve ties and strengthen regional cooperation. DW-World. however. Security Concerns Saddiq assured to ensure the safety of the pipeline with the help of the donor agencies and the international community. 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.dw-world. has denied any US pressure and said it will take a decision on the project in the country’s best economic interests. A team of Pakistani experts will visit the site shortly to conduct some technical and geological checks.de/southasia/pakistan/1. Pakistan and Iran had recently agreed to speed up work on the gas pipeline project with the possibility of India also joining.html> . Experts observe the project could ultimately be extended to India as well where energy requirements are increasing by 27 percent annually.3 million US dollars pre-feasibility report on the project. 13 March 2005 < http://www2.1.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. which initially showed reluctance to join over security concern. “The project will create linkages. The ADB had financed the 1.133266. The pipeline will travel nearly 500 kilometers through Afghanistan. allaying a major concern of the planners in the wake of the security situation in the war-torn Afghanistan.

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

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

The Minister said at present. He said work on the TAP pipeline project could be started by end of this year. Addressing a press conference here at the end of two-day TAP Steering Committee. He said additional security forces have also been recruited for providing security to various project going on in Afghanistan. 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. he assured would extend all possible assistance to make this project a success. our requirements are about 2-3 billion cubic feet per day. 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. Earlier Terming $3. Mir Mohammad Siddiq and Turkmen Minister of Oil. Responding to a question about the detailed report on the gas reserves. Gas Industry and Mineral Resources A. however.000 national army and national police force.” he added. Afghanistan. said that gas at the Daulatabad gas field will be sufficient for Pakistan’s requirements for next 30 years. Amanullah Khan Jadoon said on Wednesday that Pakistan would keep its options open for other regional gas pipeline projects. The study was funded by the Manila-based Asian Development Bank. Eng. Amanullah Jadoon said the feasibility study on the proposed 1.480kilometer pipeline completed in June last year was discussed in the meeting. Pudakov were also present. “The security situation is satisfactory in our country as we have 60.G. In his remarks Minister for Mines Afghanistan. Gas Industry and Mineral Resources A. he added. Minister for Petroleum and Natural Resources.36 IPRI Factfile project and informed the Prime Minister that President Hamid Karzai is fully committed to the success of this project. Replying to a query. he said the tripartite meeting discussed the Daulatabad-Chaman-Multan route which could be changed on the recommendations of investors. The three ministers also signed a protocol to continue discussions on the proposed .3 billion Turkmenistan-Afghanistan-Pakistan (TAP) Gas Pipeline Project as viable and feasible. Turkmen Minister of Oil.” About route of the pipeline project.” Minister for Mines and Industry of Afghanistan Eng. 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.G. Pudakov said “We have hired consultants who have given preliminary report while the detailed report will be finalized in one month.” He. he said “We would not object if India wants to join the TAP project.

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

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

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

the sources added. Jan 5: Islamabad has told Tehran that Iran-to-Pakistan gas pipeline should be pursued as a stand-alone and independent project in case India is not ready to join it. Sources privy to the meeting told Dawn that Pakistan informed the Iranian side that Iran-to-Pakistan gas pipeline project had become very attractive in the light of fresh studies conducted by Islamabad about the country's gas demand. 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. 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 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." said the statement. IRAN-PAKISTAN-INDIA GAS PIPELINE P AKISTAN P ROPOSES S EPARATE P ROJECT : G AS P IPELINE ISLAMABAD. . 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. The sources said the Iranian side was convinced about the suggestion and agreed to move forward on both the options simultaneously. it is learnt. 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. 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. "During the meeting. sources said. 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.40 IPRI Factfile III. 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. These options were discussed here on Wednesday at a meeting between oil and gas ministers of Iran and Pakistan.

the state news agency IRNA reported. he said: "In order for us to ensure such a fast and constant growth. 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. 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.dawn.com/2005/02/23/top4.htm/> G AS P IPELINE D IPLOMACY TO P ROMOTE P EACE : A ZIZ TEHRAN. Referring to Pakistan's growing economy. Under the Iran-to-Pakistan project." -AFP Dawn.htm > I RANIAN M INISTER I NVITED TO D ISCUSS P IPELINE P ROJECT : S AARC E NERGY M INISTERS ' C ONFERENCE ISLAMABAD.dawn. Feb 28: Pakistan has invited Iranian Petroleum Minister Bijan Namdar Zanganeh to start tri-lateral negotiations on Iran-Pakistan-India gas pipeline project on the sidelines of Saarc energy minister's conference next month. 23 February 2005 < http://www. 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. Mr Aziz also expressed happiness over India's agreement to join the pipeline plan. Iran has also offered to enter into some formal agreement with Pakistan to sell specific quantities of gas. "Fortunately with the agreement of the Indian government." he said.com/2005/01/06/ebr1. we need a reliable source for energy supply. Dawn. . Iran will bring its gas to the Pakistan-Iran border from where Pakistan will lay its own pipeline to its load centres.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. Feb 22: Prime Minister Shaukat Aziz said here on Tuesday that 'pipeline diplomacy' would bring peace to the region. we hope that this significant project will be operational as soon as possible.

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

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.000 barrels of crude oil a day to China for the next 25 years at market prices from its giant Yadavaran field. "It (the deal) has nothing to do with the proposed gas line project. Kharrazi in his Feb. Pakistan will continue efforts for its realization. India may agree on laying the pipeline from Iran via Pakistan up to India's territory." "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. a strong supporter of boosting energy links with Iran. while the second would be between Iran and Pakistan on how the gas is to be transported to the Indian border. Iran is committed to supply 150. 21 speech described that deal as "one of the most significant results of the strategic agreements reached by the two countries so far." According to Mengal. Mengal said: "Whether or not India joins the project. Aiyar said: "There will be two sets of bilateral agreements." Kharrazi said. 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. But if the project goes through." the Iranian foreign minister said. India agreed to participate in developing Iran's oil fields and extracting some 100.724 miles across southwest Asia. . 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. 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. it will have far-reaching geo-strategic implications for all three countries. Mani Shankar Aiyar. "The lower cost of the piped gas. Under that deal." According to Aiyar. The pipeline would extend 1. and 472 miles of it would cross Pakistan. Pakistan appears eager to play ball with the project.Gas Pipeline Projects in South Asia 43 convergence. "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. or LNG. In the first one.000 barrels of oil per day from them. stating. hopes that agreement on the gas pipeline deal will be finalized when he visits Tehran in June. And he said that Pakistan had little concern over the liquefied natural gas deal between Iran and India. a year for 25 years.5 million tons of liquefied natural gas. In return." Kharrazi's comments followed the signing of a far reaching energy agreement between the two countries in January 2005 whereby Iran agreed to sell India 7." India's Petroleum Minister. Iran will enter into a pact with India for delivery of natural gas at Indian borders. the creation of new job opportunities.

in India's case." It remains to be seen if such an organization can be created. Also. Nor was the Indian deal with Iran done behind China's back.com/upi-breaking/20050303-112309-2253r.as yet -to be remotely on the same scale. 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. 3 March 2005 <http://washtimes. For both nations are now seeking to harmonize their ravenous thirst for Middle East -. as a potential ally against the Muslim Middle East should be discarded.of oil and gas to avoid a potentially dangerous energy rivalry getting out of control. India's crucial need for Middle East oil. or at least reduced to more realistic ambitions. On Jan. let alone Japan. let alone against China.and other sources -. But it serves notice that Iran is eager to seek lucrative energy deals with both the emerging potential superpowers of mainland Asia. In any case..S. 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.44 IPRI Factfile The emerging natural gas deal with India does not appear -.htm> . 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. But there is no doubt that Aiyar is seriously committed to the idea. South Korea and Japan. Aiyar played host to an "energy summit" of petroleum ministers from China. 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. 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. as well as from eight nations in the Organization of Petroleum Exporting Countries to try and create a new "Organization for Oil Importing Countries. And having the friendship and energy dependence of China and India will clearly be a crucial counterweight to the current U. Washington Times. 6. or whether even if it can. whether it will be able to defuse and harmonize the ever more ravenous energy needs of India and China.-Iranian situation.

in which Iran must deliver gas to the Indian border or pay for the contracted quantity. in which India must pay for the agreed amount of gas even if it does not take delivery of it. or propane. With the addition of transportation and transit charges to the Iranian price. Secretary of State Condoleezza Rice is visiting India and Pakistan. and Iran should offer a special price for such a large order.5 million tons of LNG [liquefied natural gas] a year for 25 years (see "RFE/RL Iran Report. and Iranian Foreign Minister Kamal Kharrazi said the pipeline would be 2. RFE/RL reported. Iran is keen to exploit this resource as a source of revenue. "We have communicated to the Indian government our concerns about gas pipeline cooperation between Iran and India. India reportedly prefers a "supply-or-pay" contract. Aiyar explained that Iran wants to charge as much for natural gas as it does for LNG (about $4 per million British thermal unit [MBTU]). security concerns and Indian anger over Iranian business practices are putting this in doubt.50 per MBTU. Aiyar added that India and Pakistan will need approximately 200 million standard cubic meters of gas daily. preferring instead to deliver "lean" gas that does not contain butane. and India would buy 7. but U. On 16 March. however. In late-February and earlyMarch diplomats from all three countries said a deal would be signed soon. She said.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. the gas would end up costing $4. Indian Petroleum Minister Mani Shankar Aiyar announced that his country might withdraw from the gas deal. A recent flurry of diplomatic visits suggested that the deal was about to be concluded. India-Pakistan tensions over Kashmir and related security concerns have delayed the project. It could be a coincidence. is insisting on a "take-or-pay" agreement.S. One of the biggest potential customers so far is India.700 kilometers long. but Aiyar's suggestion that the deal could fall through comes at the same time that U. Iran and India signed an agreement for an overland natural gas pipeline in 1993. "We will not buy gas from Iran if we cannot sell it in India.are unwilling to pay more than $3 per MBTU. Aiyar said." 7 March 2005). Tehran. furthermore. Press Trust of India reported on 9 March. she referred to the proposed pipeline during a 16 March press conference in New Delhi. In fact. I think our . Tehran also rejected India's request for natural gas that is rich in petrochemicals. and negotiations for a pipeline stretching across Pakistan have been going on since the mid-1990s. ethane.the fertilizer and power sectors -." Press Trust of India reported him as saying. whereas the main Indian consumers -. It is therefore pursuing gas export deals with a number of countries. and in 2002 Iran and Pakistan signed an agreement on a feasibility study for such a pipeline.S.

but it is looking to other countries to fulfill its requirements. He reportedly said that India is willing to pay $2 billion for a 15 percent stake in Yuganskneftegaz. "The Financial Express" reported on 12 March. He also said India could invest $25 billion in the entire Russian energy sector. Ltd (GAIL) -. Iran is eager to reach other markets. although Iran did export to Armenia and Turkey. Qatar --with the world's third-largest natural-gas reserves (14.5 billion cubic meters of natural gas in 2002. Total.3 billion cubic meters per year of LNG. too.including Bechtel. Iran does not.4 trillion cubic meters) -. and Unocal -. Burma could be a source of natural gas. According to the Energy Information Administration. according to the Energy Information Administration. 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 . according to the Energy Information Administration." The timing of the Indian petroleum minister's comments suggest that New Delhi is pressuring Tehran for a better deal. therefore.Oil and Natural Gas Corporation (ONGC) and Erstwhile Gas Authority of India. and Burmese officials have indicated an interest in running a pipeline to West Bengal in India. General Electric. One idea is to connect Bangladesh's natural gas reserves with the Indian gas grid. Most of that gas was used domestically. And Iran's Other Markets Iran natural-gas reserves is an estimated 26.to increase production. Indian Petroleum Minister Aiyar visited Moscow and Kazakhstan in late February to discuss energy issues. but the country only produced about 76.46 IPRI Factfile ambassador has made statements in that regard and so those concerns are well known to the Indian government. India's Petronet and Qatar's Ras Laffan LNG Company (Rasgas) signed an agreement for the provision of 10. and deliveries began in January 2004. India produces gas and has worked with outside partners -.3 billion cubic meters in 2015. and it could be taking advantage of Rice's visit to leverage its position.6 trillion cubic meters. India's Other Suppliers India is a huge and growing natural-gas market. have a stranglehold on the Indian market." 25 February 2005).own equity in Burmese natural gas reserves. Gaz de France. India's cabinet recently authorized discussion of the Turkmenistan-Afghanistan-Pakistan Natural-Gas Pipeline Project (see "RFE/RL Afghanistan Report. natural gas use was nearly 25 billion cubic meters in 2002 and is projected to reach 34 billion cubic meters in 2010 and 45.is another competitor for the Indian market. Two Indian companies -.

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

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

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

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

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

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

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

Aiyar said that discussions on gas pipeline were currently at the preliminary information-sharing stage. Both sides had agreed to share knowledge about their respective studies on gas pipeline projects.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. When asked whether the Indian side had raised any concern about the security of the pipeline and uninterrupted gas supply. Mr. “Ministers only dream and babus implement the dreams. 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. In this regard I will meet Commerce Minister Humayun Akhtar on Monday for export of diesel and other petrochemicals to Pakistan. 6 June 2005 < http://www. When asked whether he took up his proposal to make China a part of this project.” About the US pressure on the pipeline project. Mr Aiyar said Pakistan had been informed that India wanted gas and LNG from Iran. and also from Turkmenistan and Qatar.htm > . 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. he said the Pakistani prime minister and the petroleum minister had promised to address New Delhi’s concerns on the issue. 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. 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. Some years back gas pipeline from Iran via Pakistan to India was a dream. He said India wanted to import gas from everywhere keeping in view its needs. Afghanistan and Pakistan gas pipeline for the import of gas from Turkmenistan. Trade of hydrocarbon would help improve the lot of poor people of both the countries. However.dawn. he added. Khaleeq Kiani. He said he had asked his Pakistani counterpart to invite him to future meetings of the steering committee of Turkmenistan.com/2005/06/06/top1.” he said. Dawn. Mr Aiyar said: “We want the mutual trade based on mutual investment also.

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

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

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

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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.

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

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

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

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

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

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

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

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

jang. Foreign Minister Khurshid Kasuri later told APP. The News. They also discussed reform of the Organisation of Islamic Conference and agreed that it should be made an effective body. Welcoming President Musharraf. 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.htm> Q ATARI G AS P IPELINE F OR A SIA T ALKS IN H AMAD -M USHARRAF The Amir of Qatar Sheikh Hamad Bin Khalifa Al Thani held on Monday with the President of Pakistan B. 6 June 2005 <http://www. "Pakistan needs more gas to further fuel and sustain higher economic growth in the years ahead. The two leaders also exchanged views on the Middle East situation with reference to Palestinians’ right to an independent homeland. Investment and Privatization Minister Dr Hafeez Shaikh. 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." he said. capable of leading the Muslim world to socio-economic development. 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. Musharraf in Doha talks that dealt with oil and gas projects between the two sides as well as means of enhancing bilateral cooperation relations.Gas Pipeline Projects in South Asia 69 looking into various aspects of the gas pipeline project. 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 president said Pakistan is facilitating foreign investors as economic activities help generate employment opportunities and therefore reduce poverty. The talks concentrated on the project to erect the Qatari liquid natural gas to Asia (India and China) via the Pakistani territories. adding that the 8.com. . Musharraf informed his host about Pakistan’s recent economic strides. Foreign Minister Khurshid Mahmood Kasuri.3 per cent growth rate achieved by Pakistan this year ranks second only to China.pk/thenews/jun2005-daily/06-06-2005/main/main3. Labour and Manpower Minister Sarwar Khan. saying the country needs to import gas for meeting its growing energy requirements in both agricultural and industrial sectors.

during the visit of then Second Deputy Prime Minister of Qatar and Minister for Energy Abdullah Bin Hamad AlAttiyah to Pakistan.186 kilometres. Pakistan is not in a position to further delay its decision to choose the project among the three proposals of gas pipelines from Iran.600 mmscf per day and the delivery point in Pakistan is Jiwani near Gwadar. The United States has already asked India not to import gas from Iran. The JTC meeting to finalise the technical and legal issues of the proposed gas has yet to be held.dailytimes. but no progress has been made so far. because of Tehran developing nuclear capabilities.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. Qatar and Turkmenistan.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.com. both countries will take up this project at the highest level during Musharraf’s visit and substantial progress is likely.asp?page=story_4-6-2005_pg7_29> . but Qatar is willing to provide 1. The president will be visiting Middle East countries from June 4 to 8. Pakistan and Qatar had earlier constituted a Joint Technical Committee (JTC) on February 14.6 bcf gas per day.pk/default. Pakistan and Qatar have long been negotiating the proposed project.html> M USHARRAF WILL D ISCUSS G AS P IPELINE WITH Q ATAR ISLAMABAD: Progress on the proposed US$1. However.com/ansub/Daily/Day/050607/2005060707. Negotiations so far claim the initial gas flow will be 1. The Pakistani president also commended the solid relations linking his country with the Gulf Cooperation Council member states and the Arab states in general. with one intermediate compressor station at Diba in the United Arab Emirates. Daily Times.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. Islamabad wants 2 billion cubic feet (bcf) gas per day. noting that these relations have been continuously reinforced since the formation of the Pakistani government. The total length of the GUSA pipeline is 1. 6 July 2005 <http://www. 9 August 2005 <http://www. and have also asked Pakistan to follow suit.

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

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

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

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

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

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

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

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

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

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

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

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

82

IPRI Factfile

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

B ANGLADESH ' S G OVERNMENT D ECIDES

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G AS P IPELINE

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

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

D HAKA L AYS D OWN T ERMS

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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.

Meanwhile.' Gail and Oil and Natural Gas Corporation have participation in two gas blocks in Myanmar. In response. 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. However. provide the two Himalayan countries with transit facilities and reduce trade gap with Bangladesh". 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. India wants to bring gas reserves from Shwe field in . Delhi requested Dhaka to send an official proposal on the conditions." "Besides." Mosharraf told reporters in Dhaka on Wednesday. cabinet has to approve the draft MoU before signing of the understanding. AKM Mosharraf Hossain. after Delhi abruptly pulled out from the 13th summit of the Saarc. Dhaka asked Yangon for deferring a meeting of the tripartite technocommercial working committee. Mani Sankar Aiyar told reporters in Delhi on February 27 that the three nations would sign the MoU in March.84 IPRI Factfile "The Governments of Bangladesh and India reserve the right to access the pipeline as and when required. on the plea that Dhaka was not prepared for the meeting.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. Dawn. including injecting and siphoning off their own natural gas. Indian energy minister. The meeting formulated a draft MoU.com/2005/03/03/int10. Speaking to Business Standard. in principle. Aiyar said. About the route of the pipeline. 'If Bangladesh does not cooperate in implementing the trilateral statement (signed in January). which was scheduled to be held in Yangon on February 14. Nural Kabir. the Dhaka's pre-conditions. the process of negotiation faced a brief setback. which reportedly accommodated. which would take at least six months. 3 March 2005 <http://www.dawn. which was scheduled to be held in Dhaka in the first week of January. The meeting was deferred by 'at least a week'. Bangladesh's state minister for energy and mineral resources. 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. The meeting was eventually held in Yangon on February 24-25." the statement read. there are several other ways we could bring Myanmar gas.

which showed that it was keen on the project. 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. 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." On land pipeline could also directly come from Tripura or Mizoram. 20 April 2005 <http://www.com/money/2005/apr/20pipe. He said Bangladesh was keen that the memorandum of understanding for the pipeline should be signed in Dhaka. 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. said Aiyar.Gas Pipeline Projects in South Asia 85 block A-1 in offshore Myanmar. Jyoti Mukul. "Whether Bangladesh is involved or not depends on whether he stick to points that are relevant and not peripheral. Pipeline through Bangladesh would be cheaper and would also help in monetising Tripura gas. Enumerating the other options. The three bilateral issues were identified by a committee of nine secretaries set up by the Bangladesh government for examining the IndiaBangladesh-Myanmar pipeline. "A pipeline could also be laid in the shallow waters." said Aiyar adding that there was no issue of substance that remained to be solved for the pipeline. The Indian government also cannot do much about the favourable trade balance it enjoys with Bangladesh since it was not willing to sell natural gas to India. he said gas could come as compressed natural gas or liquefied natural gas. 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. It could also be outside the shallow waters though there were technical problems in it.htm> . 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.rediff. transit and power supply from Nepal and Bhutan to be included in the trilateral memorandum of understanding.

allowing import of hydro electricity from Bhutan and reducing trade deficit between Bangladesh and India. he said a resolution will be passed in the next meeting and it will be sent to the Prime Minister for her approval. State Minister for Energy and Mineral Resources AKM Mosharraf Hossain. officials concerned said. Bangladesh will invite Indian Petroleum Minister Mani Shankar Aiyar to discuss about the three conditions. 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. and Indian corridor for its bilateral trade with Bhutan and Nepal. Conditions are 18 km corridor facilities between Nepal and Bangladesh through India. State Minister for Power Iqbal Hasan Mahmood and representatives from the ministries of Home and Foreign Affairs. 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. and bringing electricity from the two Himalayan kingdoms. attended the meeting.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. Tata wanted 20 years smooth gas supply for their proposed three gas-based industries. 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. As India sought specific proposals from Bangladesh in this regard. Replying to a question. 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. After the finalisation of strategy. Bangladesh wants reducing trade gap between Dhaka and New Delhi. After the meeting. 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. Prime Minister Khaleda Zia approved a bid of the Energy Ministry to formulate an integrated strategy in consultation with the concerned ministries. Mosharraf Hossain told journalists that concerned ministries have been asked to examine the proposals and send those to the inter-ministerial meeting. 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.

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

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

However. Establish in 1997. Thailand. energy.Gas Pipeline Projects in South Asia 89 "We have agreed to undertake such a study.co. The current areas of cooperation in the regional group are technology. Sri Lanka and Thailand Economic Cooperation (BIMST-EC) in Dhaka. The Bangladeshi energy minister Mosharraf Hossain said an expert committee would assess the viability of the two-and-half billion dollar project. A number of groups. given the increasing price of petroleum products. those who favour export say the country could earn about five-hundred-million dollars a year. Myanmar and Bangladesh are rich in natural gas. India. Myanmar. The minister said that because of the high level of foreign investment and potential revenue from the pipeline.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.stm> . located around the Bay of Bengal.bbc. the Awami league. but he dismissed speculation that the pipeline would also be used to export gas from Bangladesh to India. Sri Lanka. transport and communication. he said. who led the Nepalese delegation at a regional meeting last week. believe that Bangladesh should not export gas to other countries until it has secured supplies for its own domestic needs." revealed Nepalese Foreign Secretary Madhuraman Acharya. Nepal and Bhutan.com.people. including the main opposition party. 16 July 2002 <http://news. tourism and fisheries. 9 June 2005 <http://english. Myanmar.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. Bangladesh. During the meeting.cn/200506/09/eng20050609_189365. The agreement was reached during a foreign secretary-level meeting of the Bangladesh. the BIMST-EC now groups seven countries including India. trade and investment.

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