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Ipi Gas Pipeline

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Pakistan-India (IPI) Gas Pipeline is envisioned as harbinger of development and prosperity for South Asia. Often it is termed as “Peace Pipeline” as it could fulfill the energy requirements of energy-starved economies of these developing countries. The idea of IPI Gas Pipeline was conceived in 1995 when Iran and Pakistan signed an initial agreement for construction of the pipeline linking the Iranian South Pars natural gas fields in the Persian Gulf with Karachi. But later on, Iran suggested the extension of pipeline to India.

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Towards the end of 1999, the then President of Pakistan General Pervez Musharraf visited Tehran to review the progress of the proposed pipeline. The year 2000 was eventful in terms of keen interest displayed by policy makers from all the member countries. For example, in March 2000, Pakistani secretary of petroleum visited Iran to formally agree to the pipeline project between the three countries. The Iranian government officials also visited Islamabad in April 2000 for signing the contract. Despite the lucrative nature of this mega- development project, it has remained in doldrums for the last fifteen years.

For this reason many critics described it as “Dream Lines” or “Pipedreams. ”  However, in June 2010 Pakistan and Iran finalized an agreement to construct the gas pipeline without India. Iran-Pakistan-India (IPI) Gas Pipeline is going to be 2,775-kilometre long. In Pakistan, it will traverse through Balochistan, Sindh, Khuzdarand Multan. With initial capacity of 22 billion cm annually it is expected to increase to 55 billion cm. The pipeline will have a diameter of 48 inches (1,200 mm) and is expected to cost US$7. 5 billion.

Out of the total length of pipeline, its length will be 1,115-kilometer in Iranian territory. For its possible extension to India two land routes have been proposed. One is through Multan and Khuzdar and the other along the coastline of Pakistan before entering into India. There has been another suggestion from the former prime minister of India Mr. Vajpayee to extend the pipeline from Iran beneath the Arabian Sea. However, this suggestion was not economically feasible due to high installation and maintenance costs and being prone to seismic activity.

Controversies and apprehensions have been hovering around the IPI Gas Pipeline project. This is primarily due to trust deficit between India and Pakistan. As a matter of fact, proposal of constructing a pipeline underwater came from the Indian side. The supply of gas to India is threatened due to their deep rooted distrust with Pakistan (as the pipeline will pass through areas of Multan and Khuzdar) in Pakistan. Secondly, payment of substantial royalties to Pakistan as a transit country is also unacceptable to many Indian policy advisors.

India is no doubt an energy deficient country, and if 8% economic growth is to be maintained until 2032, it has to increase its power generating capacity by 83% (Statistics by Planning Commission of India). Almost 50% of India’s energy requirements are met by coal. Its economy cannot rely only on coal in the long-run as globalization and environmental protection laws and regulations are becoming stringent day by day. The carbon emission rate of India is surging at an alarming rate since the 1980s.

Moreover, the strengthening of India-US economic ties has a strong incentive for all countries to reach a common agreement. US policy is to position India as a counterweight against China in South Asian region. Secondly, the US alongwith other countries of the international community are trying to sideline Iran. They want to emasculate Iran not only on political but on economic grounds as well. On an occasion, the former US foreign secretary Condoleezza Rice remarked: “We not only expressed our concerns to India but also told Japan to stop gas project with Iran. Moreover, on another occasion the US ambassador David Mulford while warning India commented: “Voting with Iran at the IAEA would be ‘devastating’ to the future of the civil nuclear initiative of India. ” Signing of ‘Civil Nuclear Deal’ between US and India demonstrates that India is more inclined towards US for economic development. The US efforts to curtail Iran’s ‘peaceful nuclear enrichment’ program as a prelude to ‘nuclear weapons production’ is viewed as a ‘threat to global peace. ’ But to the Iranian government there is a dichotomy in US policy.

On the one hand, US condemns Iran’s nuclear enrichment, categorizing it as a threat to international peace while on the other hand it is facilitating India in such efforts. The Iranian government officials strongly insist that their nuclear purpose is peaceful and they have every right to enrich uranium for fulfilling their future energy needs. As far as the construction of pipeline is concerned, it is feasible to analyze it in the backdrop of various pipeline networks in Europe. In case of South Asia, a “segmented construction” approach has been agreed upon by member states.

It means that every member will construct part of the pipeline length in its territory. Iran has already done the major part of the work, that is, construction of 1,115 km from Asalouyeh to the Pakistani border. Now, 898 km are to be constructed by Pakistan on its territory before the aforesaid pipeline enters India, which will construct 740 km. However, the financing of IPI project is a big question as Iran is seen as a ‘problem child’ in the international community. Recently, the 4thround of sanctions was imposed on Iran by the UN Security Council in a bid to dissuade it from pursuing ‘nuclear ambitions. The economic gains which IPI promises in future are very lucrative for big oil and gas companies around the world. Despite the Iran-Libya Sanctions Act of 1996 (limiting any third country to invest not more than $20 million in any one year in Iran), aconsortium was agreed upon comprising BHP (Australia), NIGC (Malaysia), Total (France), Shell (Netherlands), BP (UK) in addition to Iranian, Pakistani and Indian national gas companies. Moreover, Gazprom (Russia’s biggest gas company) and Norwegian government showed keen interest in financing the project.

It made quite big news in 2007 when World Bank’s vice president confirmed that the World Bank is willing to fund any of the gas pipelines: IPI and TAPI (Turkmenistan-Afghanistan-Pakistan- India). An overriding consideration, particularly for the Pakistani government, is the security of the pipeline. The route runs through troubled Baluchistan. The armed violence and sabotage activities by anti-state elements in the last few years in the province pose a major threat to the safety of pipelines and consistent supply of gas.

Blowing up of gas pipelines in the areas of Sui and Dera Bugti by stateless elements demands a special levy force to safeguard the pipeline. As a result, the costs might be further raised. The pipeline project has changed the dynamics of various powers to keep their interests balanced in this matrix. For example, Russia is strongly encouraging Iran to supply gas to South Asian region. For this, Gazprom Neft is providing technical assistance. Another reason why Russia has taken a positive stance towards Iran is that they do not want Iran to venture into European markets.

Iran has a plan to make Nabucco Pipeline which is 3,300-km-long and will run towards Europe. Russia has a strong foothold in European market; almost 41% of Europe’s gas consumption is supplied by Russia. So it wants Iran to tap the eastern markets and not weaken its share in the European market. Chinais another key player which has showed keen interest in the IPI Gas Pipeline, especially after opting out by India. China’s economy is growing steadily at a fast pace. By 2020, its requirement of energy is expected to grow to 450 million tonnes of crude oil and 200 billion cubic meters of natural gas.

In order to fulfill this demand, IPI Gas Pipeline seems a viable solution. In future, the pipeline could be extended towards China via Pakistan. Pakistan- China relations are very cordial and hence agreement to set agreeable transit fees is not an issue. Another point for consideration is that China is already in negotiations with Russia to build Siberia-China Gas Pipeline. If IPI becomes functional, this will enable China to increase its bargaining power. Consequently, it would have a choice to buy gas either from Russia or from Iran. IPI Gas Pipeline, to be sure, has more long term benefits than the costs to be incurred in its completion.

An established positive correlation between ‘economic development’ and ‘energy use’ indicates that Pakistan’s economy will improve once the Iranian gas is supplied to its industries. Pakistan’s gas reserves are depleting and in order to fulfill the energy shortages, IPI holds a great opportunity. Besides, Balochistan as an underdeveloped province will get economic boost through employment, infrastructure development and provision of gas. In sum, the gas pipeline venture has economic potential of regional economic integration. With the economic linkage, Pakistan- India relations may also move towards normalization.

Ironically, the US while desiring India-Pakistan reconciliation for joint efforts against global terrorism remains opposed to any collaboration with Iran. This ill serves the cause of peace and development in South Asia and especially for Pakistan—the ‘frontline’ state against global terrorism. Therefore the US pressure has to be dealt with in order to safeguard Pakistan’s national interests. The infrastructure and technical know-how of local companies, such as Sui Southern Gas Pipelines Limited (SSGPL) and Sui Northern Gas Pipelines Limited (SNGPL) is reasonably developed to facilitate installation of the pipeline.

Moreover, in the present era when environment protection is on the priority list of many countries, gas is seen environment-friendly and as a ‘Green Energy’ resource. It is generally preferred over other hydrocarbon resources as it does not contribute to pollution such as coal and oil. Nevertheless, it remains a depleting source and in future, other environmental friendly alternatives may replace it to fulfill energy requirements for South Asian development.

Cite this Ipi Gas Pipeline

Ipi Gas Pipeline. (2016, Oct 26). Retrieved from https://graduateway.com/ipi-gas-pipeline/

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