Pakistan”s proven gas reserves, which, according to the international energy agencies are about 900 billion cubic meters, while maintaining the current production capacity, wiill reduce dramatically in 20-25 years. In 1999, Pakistan consumed 20.3 billion cubic meters of gas per year. After 10 years, in 2009, the figure nearly doubled – to 38.7 billion cubic meters. In 2015, this level is expected to reach 92 billion cubic meters. It is assumed that during this time natural gas production in the country will reduce to 31.5 billion cubic meters. Ten years later, Pakistan will need import of 60 billion cubic meters of natural gas per year to meet the domestic needs.
While US relationship with Pakistan remains fraught by a series of setbacks and a lack of trust, the long-term gas purchase agreement with Iran popularly known as “Iran-Pakistan (IP) natural gas pipeline project” has a potential to further slowdown the cooperation between the two countries jointly fighting a war against terror.
The 1.5-billion dollar Iran-Pakistan gas pipeline project is seen as a vital energy link for Pakistan’s economy as the need for natural gas is more imperative than ever for Pakistan. The country relies on gas for half of its energy needs and is already facing massive shortfalls and daily blackouts which have devastated industrial production. Islamabad views the project as a key medium-term strategy to get itself out of country’s energy woes. Long-term projections indicate that the demand for gas in Pakistan is likely to go up from the present 50 million standard cubic metres per day (mmscmd) of gas to 70-80 mmscmd in 2014-15, necessitating large-scale gas imports.
Paradoxically, the US wants to get relations with Pakistan back on track “as quickly as possible” to reopen its key supply route for foreign troops fighting in Afghanistan, but is not prepared to alleviate the country’s energy woes. Keeping Pakistan’s sacrifices in the war on terror, the US has much more to do to support Pakistan’s nascent democracy by addressing its pervasive energy shortages. Nonetheless, Pakistan needs less costly and time-consuming means to generate electricity. The United States could have addressed Pakistan energy crisis by awarding a civilian nuclear power technology akin to what it has signed with New Delhi in 2005. On the contrary, United States is trying to encourage Pakistan to utilise Turkmenistan, Afghanistan, and India’s resources, as well as to develop their own, better energy infrastructure. The US argues that Pakistan could do more at home to end the crisis, including stopping energy theft on its electricity grid and moving to upgrade domestic sources of energy, including developing renewable sources. Additionally, the US has been urging Islamabad to consider redirecting the pipeline to Qatar or the Central Asian Republic of Turkmenistan in order to bypass Iran, warning Pakistan that the I-P pipeline project could be in violation of the US, Iran and Libya Sanctions Act of 1996, which prohibits investments in the Iranian oil sector of over 22 million dollars.
Disappointed by America’s non-committal attitude, it would be prudent to reduce economic and military dependence on the United States and look for strengthening its friendly ties and cooperation with its neighbouring countries that best serve its long-term economic and strategic concerns. The situation also calls for intensified efforts on our part to enhance self-reliance and strengthen relations with China and Russia both of which may be interested in financing the I-P gas pipeline. After increase in pressure from Washington on Islamabad against Pak-Iran gas project coupled-with Pakistan’s downslide economy, Iran has offered Rs 24 billion to Pakistan for laying gas pipeline.
Initially, the Iranian government proposed the construction of a $7.6 billion Iran-Pakistan-India (IPI) pipeline in 1994, also known as the “peace pipeline”, from its South Pars fields in the Persian Gulf to Pakistan’s major cities of Karachi and Multan and then further onto Delhi, India. However, India withdrew from the IPI project as US awarded civilian nuclear power technology to India for meeting its growing energy needs. Nevertheless, Pakistan and Iran (precluding India) signed the Gas Sale and Purchase Agreement (GSPA) in June 2009. The Government of Pakistan is already determined that the imported natural gas from Iran would provide the cheapest and most suitable fuel for power generation. It has been estimated that 750 mmcfd gas would help generate around 4,000MW of electricity, besides providing job opportunities in the backward areas of Balochistan and Sindh. Iran has already laid the 56-inch diameter pipeline for a distance of 900 km from Assaluyeh to Iran Shehr. The remaining 200 km to bring the pipeline to the Pakistani border are likely to be completed in the next two years. Pakistan, on its part, is planning to complete its segment of the pipeline by the end of 2014. It is very disheartening that while the world around us is moving towards closer economic cooperation, the US wants to scuttle the I-P gas project to a energy-hungry country. It is in our national interest to get energy from wherever we can. Pakistan Foreign Minister Hina Rabbani Khar was very right when she said: “All of these projects are in Pakistan’s national interest and will be pursued and completed irrespective of any extraneous considerations”. And Pakistan has come in their way.
The United States, already at odds with Iran, is trying to stop the plan. The US-Iran tensions have been aggravated by the serious differences between them on Iran’s nuclear programme. The US and other Western countries have essentially demanded of Iran to suspend its uranium enrichment programme because they consider it as a precursor to the development of nuclear weapons.
Iran, while insisting on its right to carry out uranium enrichment under the Nuclear Non-Proliferation Treaty to which it is a party, has categorically stated that its nuclear programme is peaceful in character and that it has no intention of developing nuclear weapons. However, these declarations have not satisfied the Western countries. Consequently, the UN Security Council with the Western backing has imposed a number of sanctions on Iran. Secretary of State Hillary Clinton said that sanctions would be imposed on Islamabad if it went ahead with the project.
President Barack Obama stated categorically this month that he would not hesitate to use force to prevent Iran from obtaining a nuclear weapon. However, the US believes that diplomacy backed by sanctions still has a chance to overcome the current impasse on the Iranian nuclear issue.
From the economic point of view, it is quite plausible for Pakistan to accomplish the Iran-Pakistan pipeline project as early as possible to meet its fast-growing energy requirements.
While we must make a sincere effort to reconcile our differences with the US on different issues with a view to developing friendly relations with it, we cannot allow Washington to dictate to us, especially on issues of vital strategic and economic importance. The Iran-Pakistan gas pipeline project is too important for us strategically, politically and economically to be discarded at the behest of the US.
Equally important are our relations with the United States. Pakistanis want desperately that Americans do good things in Pakistan. Besides, it is indeed the moral and social obligation of the US to compensate Pakistan in overcoming its economic meltdown and enable it to effectively fight the militants and terrorists out of their country. After all, Pakistan has experienced huge losses fighting insurgents at its own borders, nearly 6,000 troops and between 30,000 to 40,000 civilians, besides incurring 60-70 billion dollars loss economically.
Despite divergence in views on both sides, Pakistan would like that America should support and finance I-P gas pipeline project on ‘humanitarian basis’ that is so crucial for Pakistan’s survival.
By Khalid Khokar (The Frontier Post)