US presses Pakistan on Iranian gas
By Syed Fazl-e-Haider
KARACHI - The United States has warned Islamabad against signing a
multi-billion dollar deal with Iran on a gas pipeline that could run foul of
sanctions being finalized in the US Congress. Richard Holbrooke, US President
Barack Obama's special envoy to Afghanistan and Pakistan, asked Pakistan to
wait in regard to committing to an Iran-Pakistan (IP) gas pipeline because the
anticipated sanctions against Iran could hit Pakistani companies.
Holbrooke, in Islamabad on Sunday, reportedly said legislation targeting
Iran's energy sector was being drafted in the US Congress and that Pakistan
should "wait and see". The sanctions are largely aimed at Iran's petroleum
industry. Pakistani officials so far remain firm on moving forward with the gas
pipeline project.
If Washington succeeds in calling a halt to the IP pipeline, that would also
serve to kill prospects of extensions of the pipeline
that could run to China and India, for which Pakistan would serve as a key
transit country.
Bowing to US pressure to withdraw from the IP project after signing an gas
export deal with Iran this month would sabotage Pakistan's relations with Iran,
and also go against Pakistan's own interests as it faces a drastic shortage of
energy, local analysts say. Supporters of Islamabad's stance also say it would
be folly to link the pipeline to Iran and the issue of its nuclear program, as
China and Russia are not being prevented from having lucrative power deals with
Tehran.
Even so, some analysts see the IP issue as a lever for bargaining with the US
for a civil nuclear deal similar to the one the US signed with India in 2008.
Washington wants Islamabad to address its immediate energy needs through other
means, rather than pinning hopes on obtaining civilian nuclear technology with
the help of the US.
Holbrooke's visit to Islamabad was his first visit since Iran signed a contract
this month to export 750 million cubic feet of gas per day (mmcfd) to Pakistan
in the next four years.
"We cautioned the Pakistanis not to over-commit themselves until we know the
legislation," Agence France-Presse quoted Holbrooke as saying while talking to
reporters on Sunday. "Pakistan has an obvious major energy problem. We are very
sympathetic to it. In regard to the specific project, legislation is now being
prepared which may apply to this project. This can range from legislation which
could be so comprehensive that something like this could create a major problem
for any company or country."
Last month, Islamabad and Tehran signed a sovereign guarantee agreement, after
17 years of proposals and negotiations, to kick off physical work on the
much-delayed IP gas pipeline. The deal made effective a Gas Sales Purchase
Agreement (GSPA) signed by the countries last year in Istanbul. Under the GSPA,
Iran agreed to export 750 mmcfd with a provision to increase it to one billion
cubic feet a day (bcfd) for the next 25 years. Delivery of the gas is to be
through a pipeline linking the two countries.
Hours after Holbrooke's warning, Foreign Minister Shah Mehmood Qureshi said his
government will take the IP pipeline project forward despite sanctions on Iran,
as it is in Pakistan's interests, according to a private TV channel.
While US officials have expressed opposition to the gas pipeline, the issue is
complicated by Washington's reliance on Pakistan's cooperation to fight
al-Qaida and the Taliban.
The gap between demand and supply of power has badly affected Pakistan's
overall economy, particularly industrial and agricultural production, and
hampered employment opportunities. Electricity shortages are causing blackouts
that affect businesses and intensify suffering during the hot summer months.
Holbrooke's visit followed a series of working groups last week that are part
of the US-Pakistan strategic dialogue. The two sides also held a meeting of the
Energy Working Group in Islamabad at which the US assured Pakistan of
technological and financial assistance for water and power generation
initiatives that are aimed at generating 20,000 megawatts of power by 2020,
according to the Daily Times. The developments include adding 6,000 MW from
coal power, 6,000 MW from hydro-electric power, 5,000 MW from natural gas,
1,000 MW from naphtha and other indigenous fuels, and 2,000 MW from alternative
energy sources.
The IP pipeline was initially intended to extend to India, which withdrew from
negotiations last year after signing a nuclear deal with the United States. It
has kept open the option of rejoining the project at a later stage.
Delays in implementing the IP project, local experts say, are causing the
country a daily loss of $5 million, as imports of 750 mmcfd of natural gas from
Iran would support the production of 4,600 MW of electricity, for which 7.5
million tonnes of more expensive HSFO (high-sulfur fuel oil) is required.
Pakistan's bill for furnace oils is projected to rise by 237% by 2012 to $18.6
billion.
Syed Fazl-e-Haider (http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author of many books, including
The Economic Development of Balochistan (2004). He can be contacted at sfazlehaider05@yahoo.com.
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