Gas politics

Published November 14, 2011

THE long search for a pipeline has again landed Islamabad at Iran's door. And this time the route to Tehran goes through Ashgabat. Pakistan has already struck a deal over the price of gas that Turkmenistan has agreed to provide through the planned Turkmenistan-Afghanistan-Pakistan-India pipeline project. Since Turkmenistan's price will be 69 per cent of Brent crude oil parity price (inclusive of the transit fee to be paid to Kabul) or 10 per cent cheaper than Iranian gas, it has led Pakistan to renegotiate the price with Tehran. The government believes that the gas price agreement with Ashgabat has provided it with much-needed space to manoeuvre for a reduction in the price of Iranian gas.

Islamabad is within its rights to renegotiate the price with Tehran to protect its financial interests. The Iran-Pakistan agreement provides for price renegotiation until one year before the commencement of gas flows targeted by the end of 2014. However, the reopening of the 'done deal' could delay the deadline for the completion of the pipeline by a few months, if not more, as Iranian officials are known to be 'tough' negotiators who do not budge from their position easily. The delay will not be good news for the people or the economy of a country facing a massive energy shortfall.

Indeed, the possible delay in the project is a minor concern compared to the fear that Pakistan will expose the pipeline to external pressures once it sits across the table with Iran for renegotiating the price. The American opposition to the Iran-Pakistan gas pipeline project is not a secret. Washington has never tried to hide its opposition to Pakistan's plans for importing gas from Iran and has always encouraged it to seek alternate options. The purpose has been to isolate Tehran in the region over its nuclear programme. In fact, it was under US pressure that India decided to opt out of the project. In return, New Delhi successfully secured US cooperation for its civil nuclear power projects. It is also Washington that has relentlessly been pushing for TAPI, which is projected to be completed a year later than the rival IP pipeline. Pakistan's future depends on reliable and affordable energy. That demands a firm determination on Islamabad's part to seek energy from every possible source, through TAPI or through IP, without giving in to external pressure. While Pakistan renegotiates a new price for Iranian gas, the work on the pipeline must continue to avoid further delays. The US preference for one pipeline should not lead to the winding up of the other.

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