IPI Gas(pipe)line – Crucial for Energy Requirement

While Pakistan welcomed the US offer to help it overcome the energy crisis, the US made it clear that it was linked to the relinquishing of long-dreamt-about Iran-Pakistan-India (IPI) gas pipeline project. The need for natural gas is more imperative than ever both for India and Pakistan. Long-term projections indicate that the demand for gas in India is likely to go up from the present 74 to about 500 million cubic meters per day by the year 2025, necessitating large-scale gas imports. Similarly, gas supply in Pakistan, currently 71 million cubic meters per day, is expected to increase by 50% in the next five years. The longer-term outlook would justify significant imports of gas by Pakistan as well.

Since the discovery of natural gas reserves in Iran’s South Pars fields in 1988, the Iranian government began increasing efforts to promote higher gas exports abroad. Iran contains the world’s second largest natural gas reserves “at an estimated 812 trillion cubic feet”. The negotiations to bring natural gas to India from Iran via Pakistan began in 1994. The Iranian government proposed the construction of a $7.6 billion Iran-Pakistan-India (IPI) pipeline, 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.

The gas pipeline via Pakistan is “a win-win proposition for India and Pakistan” that could serve as a durable confidence-building measure, creating strong economic links and business partnerships among neighbouring countries. But while a rival gas-pipeline project — the Turkmenistan-Afghanistan-Pakistan-India (TAPI), is supported by the Asian Development Bank and America, the IPI does not have any backing from International Financial Institutions (IFIs). However, both IPI & TAPI projects are to be routed through Balochistan, complicating the matters, as the on-going Baloch Insurgency has caused damage to the gas pipelines & other government installations in Balochistan. The US is dissuading India and Pakistan from going ahead with the project and is willing to address the long-term energy needs if New Delhi & Islamabad forgo the proposed gas pipeline with Iran via Pakistan.

Kashmir Watch