IP gas pipeline: poorly concealed motives

IP gas pipeline: poorly concealed motives

Baku, Azerbaijan, Oct.3

By Azer Ahmadbayli – Trend:

Pakistan has been a cherished market for Iranian gas since 1990, when Iran-Pakistan (IP) pipeline concept was put on the table for the first time. Iran had good grounds to believe that IP project would be successfully and timely implemented.

However, despite great efforts Iran has made within almost nine years to move the project ahead, it still remains anchored.

It is worth noting that natural gas is necessary for Pakistan’s economy as much as the air one breathes. It happens that for a long time Pakistan has lived amid continuous deficit of energy resources which strongly affects economic development. Around half of those resources fall on natural gas.

In 2016, the country produced 41.5 bcm of natural gas, whereas consumption made 45.5 bcm, according to BP Statistical Review of World Energy 2017. The difference, i.e. 4 bcm was imported in the form of LNG from several countries, but mainly from Qatar. By the end of 2016 annual deficit of gas supply amounted to 20.6 bcm, according to Shahid Khaqan Abbasi, the former oil minister of the state.

Secondly, the IP pipeline is the most easy-to-implement option to deliver gas to Pakistan. It is enough to look at the map and see that the pipeline concept makes sense even in terms of the most thorough critic. Iran completed his 900 km part of the pipeline in 2014, while Pakistan has remained undecided on the issue.

If you surf the net, you will find that there have been three ideas experts put forward as a motive of the project’s non-performance.

- The first is that Pakistan has no money to construct its part of the pipeline.

- The second is linked to oil/gas-related sanctions that were imposed on Iran.

- The third is associated with political pressure on Pakistan by USA to reject or at least suspend the project.

They used to have been voiced separately or altogether.

All of the ideas looked plausible until the events that began to take place in 2015.

In 2015 China and Pakistan came to a government to government (G2G) agreement to construct a 711 km-long Nawabshah-Gwadar gas pipeline on the territory of Pakistan. This pipeline, if constructed, could become a core segment of the Iran–Pakistan gas pipeline. The most important here is that the Chinese side undertook commitment to finance 85 % of the engineering, procurement and construction (EPC) contract. At the beginning the construction of the pipeline was appraised at the cost of $2 billion, but later it was finalized at $1.325 billion. Also, building the missing 80 km of IP pipeline from Gwadar to Pakistani-Iranian border was considered not a big deal.

It comes out from the above shown figures that Pakistan would bear minimal financial burden within the project. However, in June this year Pakistan took an unexpected decision to drop the highly competitive project.

As Pakistani media noticed, “ironically, this project has been shelved on the pretext of its higher cost despite the fact that earlier Executive Committee of National Economic Council had approved the project after detailed cost examination and given it the go ahead”.

I do not state it for certain, but the money issue can likely be excluded.

Again, in 2015 the six leading states entered into agreement, known as JCPOA, with Iran, to curb its nuclear activities. The deal resulted in drop of majority of sanctions including those in oil and gas sphere. For the moment, Iran successfully sells its oil to Europe and signs contracts to develop its gas fields with major international oil and gas companies. So, the second option (Iran sanctions) may also be excluded.

Supposedly we have found out that to a greater degree it may be political pressure that the US exerts on Pakistan to limit Iran’s influence on its South-Eastern neighbors.

But, what if it’s just an economic rivalry? Qatar has already taken priority in gas supplies to Pakistan, having signed a multibillion-dollar contract with Islamabad for LNG export. Major US oil and gas companies have partnered with Qatar in this business.

On a large scale, it is not so important what is dominant here - politics or economics, because these two are tightly linked with each other and serve one certain purpose that was clearly described by Arthur Schopenhauer: “Ultimately, an organized world, for all the relative compliance of its order with the conditions of existence, is condemned to the fierce struggle taking place between individuals and groups for the possession of material values, which is the source of the greatest suffering.”

And finally there is a detail need to be noted. According to Pakistani media, Iran has been utterly annoyed with another delay of the IP project for the umpteenth time.

Then it is just the right time to remind about Iran’s position over the implementation of Transcaspian gas pipeline project to export Turkmen gas to Europe.

Isn’t it similar to how the US is dealing with the IP project?

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