IPI pipeline a good option - but a security nightmare (Commentary)

July 6th, 2008 - 10:21 am ICT by IANS  

A file-photo of Pervez Musharraf
By Gurmeet Kanwal
Pakistani Foreign Minister Shah Mahmud Qureshi said after a visit to New Delhi last month that most of the outstanding differences on the Iran-Pakistan-India (IPI) gas pipeline had been resolved and that the three countries were now in a position to reach final agreement at the next round of joint talks. In order to allay India’s apprehensions, Qureshi also conveyed Pakistan’s offer to guarantee the physical security of the gas pipeline. As the pipeline will run through Pakistan’s troubled Balochistan and Sindh provinces and can be easily disrupted, the moot question is this: given its unstable internal security environment, is Pakistan in a position to guarantee the security of the pipeline? However, the risk of frequent disruptions and their impact on downstream power generation and other projects such as the manufacture of fertiliser must be weighed against India’s desire to enter into viable long-term contracts for oil and gas supplies so as to ensure energy security for its growth and prosperity.

The Persian Gulf region is a major source of oil and natural gas for India. Iran is an energy giant, with one foot in the Caspian Sea and the other in the Persian Gulf. It is mutually beneficial for India and Iran to enter into a buyer-seller relationship for natural gas that Iran has in abundance and India desperately needs. The geographical location of Iran’s natural gas reserves at the South Pars field is such that the Indian - and, to some extent, Pakistani - markets are the only major markets that can be profitably served through overland pipelines.

Natural gas is transported either through overland or undersea pipelines in its natural state or as liquefied natural gas (LNG) in tankers that ply on the high seas. This is a costly venture. The capital outlay that would need to be incurred would include an expenditure of $2 billion for a liquefaction unit, upwards of $200 million for each LNG tanker and $500 million for a re-gasification plant.

Offshore pipelines are difficult to construct and maintain.

A deep-sea gas pipeline, still technologically suspect, would cost almost as much to build, operate and maintain as the LNG option. A pipeline from Bandar Abbas to Jamnagar through the shallow waters on the Continental Shelf is economically more viable but will be vulnerable to disruption. This 2,900-km long pipeline would cost approximately $5 billion, to be shared by India and Iran.

Considered purely in economic terms, overland pipelines present the most viable commercial option. The 2,200-km overland pipeline from Assaluyeh and Bandar Abbas in Iran, which would pass through Pakistan and link up with the existing HBJ pipeline in Rajasthan, is likely to cost $3-4 billion to construct. Since this pipeline would supply natural gas to Pakistan also, the cost would be proportionately shared by India, Iran and Pakistan. The overland pipeline option would suit Pakistan too as it would benefit by netting a transit royalty of $500-700 million annually, besides getting a regular source of gas with minimal investment.

Though this option through Pakistan is economically the most viable, India must consider whether good economics should be allowed to be jeopardised by bad security. India must not allow the supply of a strategic resource to be held hostage to the machinations of capricious jihadi elements. Also, the Baloch people are concerned that Pakistan will not equitably share with their underdeveloped province the revenues earned from the pipeline. A new wave of vigorous insurgency has engulfed most of Balochistan and the gas pipeline is bound to be targeted.

Though the government of Pakistan has stated several times that Pakistan is willing to give a unilateral undertaking that it will not allow the disruption of the supply of gas to India, President Pervez Musharraf had admitted that his government had no control over some jihadi organisations that are responsible for internal instability in Pakistan. Since then, internal instability has deteriorated further. How then will the Pakistan government ensure the physical security of a pipeline that runs for almost 1,500 km through open terrain even if it is inclined to do so?

The diameter of the gas pipeline would be 50 to 55 inches. Though such pipelines are mostly buried underground, they are laid just below the surface and their route is well marked to facilitate maintenance, making them prone to easy disruption. The compressor stations that are usually overground are also vulnerable to sabotage, though these are easier to guard.

Any terrorist group or disgruntled individual fanatic with a medieval mindset could disrupt the pipeline with a few grams of plastic explosive or a few hundred grams of high explosives that are available in abundance in Pakistan. In fact, explosive charges, detonators and cordite are so freely available in some areas in Pakistan that one can buy the stuff from the neighbourhood grocer. Under such circumstances, ensuring the security of the pipeline would be a challenge for the most committed police or paramilitary force.

The entire length of the pipeline would need to be fenced off on both sides to deny easy access to prospective saboteurs. Since wire fencing can be easily cut, it would need to be kept under electro-optical surveillance throughout its length, combined with continuous physical patrolling. All these measures would cost a massive amount to implement and would still not guarantee 100 percent security.

A more suitable option may be to form an international consortium of stakeholders to build and operate the pipeline, buy the gas from Iran and deliver it at India’s border. Such a consortium will incur heavy costs to ensure the security of the pipeline. Also, higher insurance costs, other opportunity costs and the need to maintain larger strategic reserves might well make the overland option too expensive.

Perhaps the best option at present is to continue with LNG while simultaneously exploring the possibility of a secure overland route with unimpeachable international guarantees. If India can get natural gas at the border and has to pay only for what it gets - cash-on-delivery - without sinking its money into capital investment, the Iran-Pakistan-India pipeline might still be a good option. Decisions made today will affect India’s energy security and have an impact on the growing economy for decades to come and must, therefore, not be made lightly.

(Gurmeet Kanwal is Director, Centre for Land Warfare Studies, New Delhi. He can be contacted at kanwal.gurmeet@gmail.com)

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