A high-risk pipe dream
While India clarifies that there is no international pressure involved in halting the Iran-Pakistan-India gas pipeline project. May be true says Gayatri Ramanathan, Editor, The Energy Businees, but attributes the real reason to the security risk attached to it.
On the sidelines of a recent meeting between the former foreign ministers of Pakistan and India held at Khursheed Mehmood Kasuri’s residence, Mani Shankar Aiyar, former petroleum minister and one who supported the idea of an Iran-Pakistan-India pipeline throughout his tenure claimed that there was “no international pressure” involved in halting the Iran-Pakistan-India gas pipeline project. The real issue he claimed was the pricing formula.
Aiyar’s comments are in line with what the Indian government has been saying at several national and international fora, it has repeatedly reiterated its “commitment” to building the pipeline, without either of the other concerned parties exhibiting a similar sentiment.
It has even denied the likelihood of a deep-sea pipeline that bypasses Pakistan. Answering questions regarding the signing of pact with Iran on gas supply, minister of state for petroleum and natural gas Jitin Prasada, however, said in written replies to Rajya Sabha that a memorandum of agreement had been signed between Indian and Iranian companies on 1 December, 2009 but the two countries had not signed pacts on energy needs.
All of which goes to highlight the seriousness with which the Indian side is taking the issue of securing energy supplies for the future. It is understandable that in order to fuel its growing economy, India should turn to Iran. The proposed 2,600 km pipeline would carry natural gas from gas fields in Iran to India at an approximate cost of US $ 7.5 billion dollar via Pakistan.
And on the face of it, it is a win-win deal for all – Iran gets around US $22 billion for 5 million tonnes of gas over a 25-year period. Pakistan favors deal because in addition to getting natural gas from Iran, it earns an estimated US $ 1 billion annually as transit fees.
For sometime now, it is the US that has been throwing the spanner in the works. The US sees the pipeline as means for Iran to escape the economic sanctions imposed by the west for its nuclear weapons programme. The US concern is that the international investment in Iran’s oil and gas industries is giving confidence to the Iranian government, and that Iran is not paying much of a price for its defiance of the Security Council over the nuclear matter.” The United States says Iran would benefit from huge gas sales as a result of the pipeline. Washington fears the pipeline will reduce the West’s economic leverage over Tehran – economic leverage that is necessary to persuade Iran to abandon its nuclear ambitions.
But analysts believe that the US cannot afford to sacrifice its relationships in the subcontinent to the pipeline, and in fact, such pressure may backfire. “If Indian public opinion sees that Americans are pressurizing India because India wants to have good relations with Iran, then old memories of the Cold War come into play, and a big part of public opinion, particularly the left parties, say that we should not be pressurized by a superpower like America and we should be free to have whatever relations we want with any other country like Iran,” says a London based Indian analyst Vijay Rana.
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National security advisor and former foreign secretary Shiv Shankar Menon went on record to neither the pipeline nor the relationship between India and Iran should concern Washington or any other third country: “Everything we do with Iran is open, above board and quite clear to everybody. Frankly, from our point of view, the more engagement there is, the more Iran becomes a factor of stability in the region, the better it is for us all.”
Adds Washington-based Pakistani journalist Khalid Hasan “The fact is that this pipeline suits Iran, it suits Pakistan, it suits India. It will also be a major contributor to the goodwill of the peace process now underway between India and Pakistan. So, I think the national interests of all three countries will override any objections the US might have.”
At least they should. But given the current internal security environment in Pakistan, the pipeline stands in danger of becoming another potential high-risk, high-probability hostage to the Taliban’s efforts to control the Pakistani establishment. Says an Indian security analyst, “The pipeline at this point of time is fraught with risk given the internal situation in Pakistan.”
As oil secretary S Sundareshan said recently, “We have genuine issues that need to be addressed before we sign up for the pipeline.” Most of them concern the secure delivery of gas. In fact, New Delhi has been boycotting project talks since 2008 after its concerns of safe delivery of gas were ignored. It wants Iran to be responsible for safe passage of gas through its 1,035-km route in Pakistan and would pay for the fuel only when it is delivered at the Indian border.
Iran on the other hand has suggested a trilateral mechanism, meaning contractual provisions between three countries, to ensure safe delivery of gas to India. Under this system, New Delhi pays for its share of gas even if the supplies were to be disrupted in Pakistan. While the 1,100-km pipeline from South Pars gas fields in the Persian Gulf to Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.
India feels that its participation in execution of pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of the operations, they said, adding Islamabad has so far not agreed to the proposal. Iran is unwilling to commit to a supply-or-pay regime wherein it would have been held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries. All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad. This obviously is not acceptable to India.
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