Loud Thinking December 24, 2013 at 10:31AM

IP pipeline: A pipe dream!

Published in the daily “The Nation”.

December 24, 2013 YASMEEN AFTAB ALI

Iran, losing patience with Pakistan has finally snapped the gas umbilical cord annulling the gas supply contract entered upon with Pakistan. Not that Pakistan did much once the understanding was reached. Dragging its feet, Pakistan was happy to just rest on its haunches, pleased at having reached the understanding at all. No further effort was seen forthcoming to convert this understanding into a reality. No monies were seen to be reserved for the project in the current budget in spite of increasing gas shortages. This, in spite of the government being forced to stop gas supply for winters not only to CNG pumps but also to the fertilizer plants and other industries in Punjab.
There could have been many reasons for Pakistan playing coy on the project; or maybe a mix of reasons. First, Pakistan may have dilly dallied owing to the rates at which it would have had to import the gas from Iran even after the project was completed. The rates would have been high. Much higher than the ability of the average domestic consumer to afford. According to a report by a local newspaper, “Iran itself imports gas from Turkmenistan at USD 4/MMBtu while the price at which it would export to Pakistan is an exorbitant figure of USD 14/MMBtu.” (Published 2013-11-09) Added to this is the fact that Iran herself imports gas; seasonal increases in the demand in winter makes it difficult for Iran to supply gas to Turkey as per their needs. “On October 1, Iranian Oil Minister Bijan Namdar Zanganeh himself raised concern about Iran facing serious gas shortage because of slow progress in raising levels of production from South Pars – the field that is supposed to fill the IP pipeline. If such factors were seriously taken into account, the pipeline agreement would likely have never been signed at the first place.” (Published 2013-11-09)
Now I am no economist God knows, just had economics as a major when I graduated college, but I am sure our government has a wide range of economists to choose from. As they can choose other experts from different fields as and when needed. Unfortunately, on the face of it, all pros and cons were maybe not evaluated maturely as they should have been. This lack of ability to make long term and short term plans in light of economic ground realities and furthermore, inconsistency of approach and strategies by different incoming governments has not allowed Pakistan to make headway on a sustained, long term basis.
The decision to convert cars from petrol/diesel to gas was a deliciously idiotic one and in complete disregard of the basic principle of supply and demand of economics. Many were happy when it was taken. Here they were, using an expensive option; now suddenly their needs could be met by gas! But the bubble did not last. The principle of limited supply verses increasing demand asserted itself and people with CNG cars et al were first reduced to standing for hours in line after the CNG stations reopened after days of closure to have the tanks filled to a time where supply of gas is stopped altogether for winter season.
USA was dead opposed to Pakistan entering into a gas deal with Iran. This may probably have weighed heavily with the government not having made headway on this front. Instead, US has pushed Pakistan to negotiate a deal with India. The joint statement released upon Pakistan’s Prime Minister Nawaz Sharif’s visit to US not long ago says, “welcomed progress on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, and tasked the Energy Working Group to explore possible further US support for the Central Asia-South Asia electricity line, CASA-1000, in close collaboration with the World Bank.” (India Today October 24, 2013) No one can deny the advantages accruing from India-Pakistan good terms; yet neither can one deny the ground realities. These issues have created a trust deficit and cannot be easily overlooked. Pakistan will find it difficult to engage with India on the crucial gas needs. There will always be a valid concern of this being used against Pakistan for political and economic leverage. On the bigger canvas, it can be seen as a policy approach by US –India towards the region and Pakistan in particular. Focusing on one issue only; Times of India reports that Pakistan has accused India of violating the Indus Water Treaty 1960.In an editorial, titled ‘Games They Play? India’s Water Infringement’, claims that India is in the process of building as many as 67 dams on Pakistani rivers in violation of Indus Water Treaty (IWT). India has built and is in process to construct big and small dams, hydropower projects and reservoirs, numbering as many as 67, on the principal rivers – Indus, Jehlum and Chenab – that were allotted to Pakistan under the IWT.” (Published September 24, 2013) This is only one example.
Also, India, like Iran, imports gas. India’s power ministry had made a proposal as recent as September 2013 to mix imported gas with the locally produced one and supply the same to electricity producers. As per Wall Street Journal, “A shortage in the supply of coal and gas has led power producers to idle plants and suspend capacity expansion.” How then, can India sustain a continuous supply to Pakistan at reasonable rates?
What options does this leave Pakistan with? Some suggest Pakistan should look within in order to develop sources for alternate energy. They suggest gas production from shale, a revolution introduced by US. However, Maria van der Hoeven, executive director at the Paris-based International Energy Agency says about hydraulic fracturing of shale, “It’s likely there will be a revolution. But not everywhere at the same time. And you just can’t copy the U.S. experience.” (Bloomberg November 15, 2013) Report by a local newspaper carried on August 28, 2013 states, “The EIA also estimated risked shale oil in place for India/Pakistan of 314 billion barrels, with 87 billion barrels in India and 227 billion barrels in Pakistan. “The risked, technically recoverable shale oil resource is estimated at 12.9 billion barrels for those two countries, with 3.8 billion barrels for India and 9.1 billion barrels for Pakistan.” These amounts are contradicted by another report by another newspaper (local) dated August 31, 2013, “In Pakistan’s case, the EIA projection is based on scanty data from an article published in 1986 by Viqarun Nisa Quadri and Shuaib, SM, in the AAPG Bulletin, volume 70. “The article focuses on the overall petroleum potential of the Southern Indus rather than shale gas and oil, a resource which was not known at that time,” says a leading geoscientist associated with a public-sector petroleum explorer.” The bottom line seems to be a lack of focused, concentrated study aimed to bring out exact facts.
At the moment Pakistan has few options. Exploring the natural resources within and converting it into useable gas is going to take time. This however, does not mean, this should be overlooked. Not by any long shot. What it does mean is that the government should start working on this for a long term basis, however, in the short term, in order to offset the shortfall in supply, to focus on importing gas as energy mix with the existing reserves. It is here that the Iran gas pipeline would have aided Pakistan overcome the shortage presently being faced by the economy which in turn has a cascading effect on the output of industries and so on.
Whatever decision the Pakistan government decides to take, must be based on ground realities, existing geo-political situation and in favor of national interest.

The writer is a lawyer, academic and political analyst. She has authored a book titled A Comparative Analysis of Media & Media Laws in Pakistan.

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