ENERGY-SOUTH ASIA: Gas Pipelines May Shorten Route to Peace

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Jul 5 2001 (IPS) - Natural gas pipelines may yet succeed in bringing peace and prosperity to South Asia, bedeviled by mistrust and suspicion among neighbours that has hampered the economic growth of the region.

When Pakistan President Pervez Musharraf comes calling for his Jul. 14-16 summit with Indian Prime Minister Atal Behari Vajpayee, the only deal he can be reasonably sure of concluding is one for a 2,500 km gas pipeline that will bring Iranian gas to India through a 707 km stretch of his country.

But Pakistan and India have a simmering dispute over Kashmir, a territory the two countries have fought several wars over and may well dominate this month’s bilateral talks or discourage discussion of other agreements.

Indeed, Musharraf has insisted repeatedly that the 54-year-old territorial row must take precedence over others at the summit. India has not agreed to that order of priority.

When he accepted India’s June invitation for talks, Musharraf said the Kashmir issue had to be resolved “in the interests of the poverty- stricken one-fifth of the world’s population, in the interest of economic growth in this region.”

But Musharraf has also publicly blamed his predecessors in government for not pursuing Pakistan’s share in the gas deal, for which India and Iran first signed a memorandum of understanding in 1993.

If the deal comes through this time, Pakistan, burdened by a stagggering 37 billion dollar foreign debt, could easily earn 500 million dollars annually in transit fees for the 707 km of its territory that the pipeline would traverse.

But political conflict and suspicion between the nuclear-armed rival countries, India and Pakistan, has inevitably wound its way around the pipeline project.

India, which has been accusing Pakistan of supporting violent separatist militancy in its portion of divided Kashmir, fears that a pipeline running through Pakistan would be highly vulnerable to sabotage.

Energy expert and director of the New Delhi-based Tata Energy Research Institute (TERI) R K Pachauri, who has been pushing for years what he calls the “pipeline to peace”, says neither New Delhi nor Islamabad can afford not to conclude the deal.

Nor for that matter can Tehran, which is aware that India is the only readily accessible large market it can readily service because of the geographical location of its gas deposits in the Assuliyeh fields in southern Iran.

“It is in Iran’s and Pakistan’s individual interests to think of a gas pipeline all the way to India because the size of India’s imports would allow for economies of scale,” Pachauri said.

Energy-hungry India currently produces 65 million cubic metres of natural gas a day, but needs at least 115 million cubic metres. Its demands are projected to reach 279 million cubic metres by 2010.

Some of India’s needs, especially in the country’s eastern region, could be met by laying a pipeline to vast untapped deposits in Bangladesh. But the plan has been blocked by the main Opposition Bangladesh National Party (BNP), which thrives politically on a pronounced anti-India stance.

Investment toward this plan by U.S.-based energy companies in Bangladesh, chiefly Unocal Corp., has already crossed 750 million dollars and they promised further investment up to 2.5 billion dollars provided Dhaka agrees to export the gas to India.

Studies show that Bangladesh could earn up to 600 million dollars a year from gas exports to India, money which could go into buying cheap hydro-electric power from Nepal and integrate the energy sectors of the three neighbours.

Nepal’s swift-flowing Himalayan rivers have the potential of generating 83,000 megawatts of electric power. But to even think of tapping it, the landlocked country must necessarily cooperate with India — and the two neighbours already have had disputes over how best to share water resources.

The key to all of these cooperation is renewed efforts at building trust, a factor which has been missing in India’s recent relations with its neighbours in a region considered the most populous and impoverished in the world.

Failing that, international stakeholders could be brought to guarantee minimal disruptions arising from internal or bilateral political exigencies.

Pachauri would like to see U.S. companies involved, although this may not be popular with Tehran in the Indo-Iranian deal.

Alternatively, India could import larger amounts of gas than it actually needs and convert the surplus into liquefied petroleum gas (LPG) for export to influential countries like Japan and South Korea — thus making them stakeholders in the scheme.

India could also use the gas as feedstock for power stations that could supply power over the border to Pakistan in a “mutually interlocking agreement that would prevent Pakistan disrupting the supply of gas,” Pachauri said.

Indian Foreign Minister Jaswant Singh has already indicated that India would prefer to deal directly with Iran and pay only for gas actually delivered. “When things are finalised, it will be Iran’s obligation to deliver gas in India,” he told reporters recently.

The tough-talking Singh has also been bruiting about the possibility of India opting for a deep-sea pipeline through the Arabian Sea, bypassing Pakistan even though that would be three times costlier than the overland route through that country.

Islamabad, already rattled by the shelving of another international project for an oil pipeline from Turkmenistan, through Afghanistan and on to its port of Karachi, has in the run-up to the summit gone out of its way to guarantee the safety of the pipeline project.

Pakistan’s Petroleum Ministry has already announced that Islamabad was “completely in favour” of the project that would see a pipeline from Iran reach India through Pakistan.

On Tuesday, Pakistan’s Petroleum Minister Usman Mainuddin told reporters in Washington that his country would “immensely benefit” from the project since it included 700 million dollars in foreign investment and would allow Pakistan to tap gas for its own use.

In short, an agreement to push the pipeline project at the summit would do more for confidence-building between South Asia’s two largest countries than anything else that is likely to be discussed — including Kashmir.