Gasline on the backburner

The fact that US pressure on India has worked rather well is evident from the question mark that has come to hang over the 2,600-km-long gas pipeline from Iran to India, discovers Paranjoy Guha Thakurta

A major casualty of the American opposition to Iran's nuclear programme is the proposal to build a 2,600-km-long natural gas pipeline connecting India and Iran through Pakistan. Everybody and his brother know that the pipeline—that would cost around US$ 7 billion, or over Rs 30,000 crore, to construct—would greatly benefit the economies of all three countries. But on account of the vehement opposition to the project from the Bush Administration, the pipeline is unlikely to materialise in a hurry.

A number of analysts have argued that the deterioration of relations between Washington and Tehran is not the only reason why a big question mark
hangs over the proposed pipeline. It is pointed out that India is unwilling to pay Iran "market" prices for gas and would prefer paying "affordable" prices that are below market rates. Then, political unrest in Pakistan's Baluchistan province is cited as another reason why the pipeline project could be jeopardised. Thus, it is argued that a longer pipeline along the coast of Pakistan might be a safer bet. Meanwhile, New Delhi is supposed to be exploring the possibility of a brand new TAP (Turkmenistan-Afghanistan-Pakistan) pipeline.

Even if there is more than a grain of truth in the issues mentioned, and even if India needs more than one cross-country gas pipeline, the fact that US pressure on the Manmohan Singh government has worked rather well is evident. Who does not know the real reason why Mani Shankar Aiyar was unceremoniously ousted from the post of minister for petroleum and natural gas? His avowed faith in the virtues of Nehruvian socialism is not exactly an official secret. Nor is the fact that Murli Deora, Aiyar's successor at Shastri Bhavan, was a privileged invitee to a breakfast meeting in the White House not very long ago. And who does not know that the demoted former petroleum minister—now holding the portfoliosof sports and youth affairs in addition to panchayati raj, which he had earlier held—was not just keen on expediting the construction of the Iran-Pakistan-India gas pipeline but also had a vision of a pan-Asian hydrocarbons grid that would include Russia and the Commonwealth of Independent States.

Irrespective of American opposition to such grandiose dreams that threaten the perpetuation of a unipolar world, such a grid may still materialise one day when many countries—like China, on the one hand, and Bangladesh and Myanmar, on the other—realise that economic cooperation can coexist with competition. Relations between India and Pakistan may not improve significantly in the near-term, but the Indian government would be acting in its "enlightened self-interest" if it did not completely abandon the pipeline project by kowtowing to Uncle Sam. Deora claims the project is on, although there are difficult hurdles that have to overcome. Most independent analysts would, however, argue that the project has been placed on the backburner.

Of late, there has been much talk of "energy security". For India, the project makes eminent economic sense. The facts are stark and incontrovertible. India currently imports close to three-fourths of its total requirement of crude oil to fulfil the demand for petroleum products that is increasing as fast as the country's economy. Since domestic production has stagnated despite new discoveries of oil and gas, India is certainly going to become even more dependent on imported crude in the years ahead. Geographical proximity ensures that much of the country's crude imports gets sourced from oil exporting countries in West Asia. Why else was the Saudi monarch feted so lavishly in January?

Why the gas pipeline? Gas is not just much cleaner in comparison to liquid fuels. The cheapest way to transport gas is to pump it through pipelines laid on the ground, not liquefy it and then send it over oceans in tankers. At one stage, the possibility of building undersea pipelines was explored but the costs were prohibitively high. After India took a position against Iran during the February meeting of the IAEA, Tehran, in retaliation, refused to ratify a deal to supply 5 million tonnes of liquefied natural gas to India from 2009.

The proposed pipeline is expected to transport 90 mscm of gas every day from Iran's South Pars fields to India from 2009-10 onwards. This quantity of gas is almost equal to the total amount of natural gas available in India at present. The pipeline is also expected to supply 60 million standard cubic metres per day of gas to Pakistan. There have been reports that the governments of the three countries may consider building parts of the pipeline as "independent" projects to avoid US sanctions.

The question remains as to whether the Indian government has the guts to go ahead with constructing the pipeline against Washington's wishes. Or, will the pipeline remain just a pipedream—at least, in the foreseeable future?