Pakistan-Iran Joint Committee on oil, gas and energy met in Islamabad from July 17 to 18 and discussed cooperation between the two countries. The committee agreed to form a Joint Working Group to speed up the Iran-Pakistan Gas Pipeline Project, despite US and EU sanctions on dealings with Iran.

The two sides agreed to include experts from technical, legal financial and commercial sectors in the JWG to work out the details and to develop a strategy for the project. Iran also showed interest in the Exploration and Petroleum sector of Pakistan and has invited the country to do the same in Iran.

The 785-km gas pipeline is scheduled to start by December 2014. According to reports, Pakistan is presently facing a shortage of 2 billion cubic feet per day while its present production is at 4.2 billion cubic feet.

Pakistan has assured Iranians about its interest in the project and to bring in Russia and China as well. Both nations have in the past shown enthusiasm on joining the gas pipeline project.

The post Iran-Pakistan Gas Pipeline Project Expedited Despite US Opposition appeared first on Politact.

Pakistan is committed to Iran Pipeline project and wants expeditious implementation. The decision was passed at the meeting of the Pakistan-Iran bilateral talks between its Finance minister Abdul Hafeez Shaikh and visiting Iranian International Affairs Vice President Ali Saeedlou on Tuesday.

The minister and the Iranian counterpart have expressed commitment to complete the pending work at the earliest possible. According to Pakistan’s Petroleum Secretary Ijaz Chaudhry, both sides reviewed the progress and will expect the completion of the project by 2014.

However, the project has drawn strong reaction from Washington. Media reports indicate a senior US diplomat has stated that any attempt to go ahead will be construed as furthering Iran’s nuclear program. The US has warned Pakistan of serious trouble if it does not abandon the venture. He said any country; bank or financial institution that works with Iran will have to face the sanctions.

Pakistan and Iran are also discussing ways to enhance bilateral trade through banking cooperation and currency exchange.

The post US Warns Pakistan On Energy Project With Iran appeared first on Politact.

Commenting on the Pakistan-Iran gas pipeline project, he informed that Tehran has completed work on its side with the help of a German firm, while Pakistan has shown lack of interest. He attributed this to pressure from other countries to cease the project.

Commenting on the border incidences between Pakistan and Iran, the Iranian official cited the poorly defined border as the cause. He clarified that a committee has been formulated to prevent such incidences in the future.

The post Iran Approves Electricity Project For Balochistan appeared first on Politact.

This clip is the first segment of PoliTact’s GIPSEE (Global Intelligence, Political, Security, and Economic Estimate) Geopolitical Forecast. In this part, we talked with Shahid Javed Burki about the economic and political patterns of Pakistan and South Asia.

Analysis

The post PoliTact’s Economic Trends For 2012, With Shahid Javed Burki – Part 1 appeared first on Politact.

Pakistan and Turkmenistan on Monday agreed to expedite their energy projects. President Asif Ali Zardari met with his counterpart Gurbanguly Berdymuhammedov and announced that the two countries would make efforts to speedup the $7.6 billion four-country pipeline project.

The pipeline which was shelved last December in Ashgabat, was expected to run through Turkmenistan, Afghanistan, Pakistan and India. The two leaders announced that direct air links would be started between Pakistan and Turkmenistan to boost economic cooperation.

The TAPI pipeline would also be set up to provide energy security. Major issues including drug and weapons trafficking, illegal immigration, regional and international stability were also discussed. President Zardari praised the Joint Inter-governmental Turkmen Pakistan Commission for its role in strengthening the relations between the countries.

The post Pakistan, Turkmenistan Agree To Speedup Energy Projects appeared first on Politact.

Russia announced it would publicly endorse Pakistan’s bid for full membership of the Shanghai Cooperation Organization (SCO). Russian Prime Minister Vladimir Putin was responding on Monday to Pakistani Prime Minister Yusuf Raza Gilani’s address at the Heads of Government meeting. The Russian Premier told reporters that Pakistan was an important economic and trade partner for Russia and also announced his country’s support for Pakistan’s proposed trade and energy projects.

“Pakistan is not only an important trade and economic partner but also a key Russian partner in South Asia and the Islamic world,” Putin was quoted as saying by ITAR-TASS news agency

Russia will also provided partial funding and technical assistance for:

• CASA-1000, a power transmission plant which will allow for the transfer of electricity from Central Asian states such as Turkmenistan, Tajikistan and Kyrgyzstan to Pakistan
• Expansion of Pakistan Steel Mill ($500m Grant)
• Guddu and Muzaffargarh power plants, and
• Thar Coal project

The post Russia To Support Pakistan’s SCO Membership And Energy Needs appeared first on Politact.

A senior Pakistani official on Tuesday urged closer cooperation between Islamabad and Beijing in the energy sector. Syed Naveed Qamar, Pakistani Federal Minister for Power and Water, made the comments during a press conference at the Pakistan Embassy in Beijing. Referring to the power shortages faced by Pakistan, Qamar said that the two nations should boost cooperation in fields like hydroelectric power, oil, gas and nuclear energy. Qamar visited Beijing to attend the first China-Pakistan Joint Energy Working Group (JEWG) summits, which were held between August 1st to 3rd.

The post Pakistan Wants To Boost Energy Cooperation With China appeared first on Politact.

Context

Russia and Pakistan on Thursday agreed to boost investment, trade and undertake joint projects especially in the areas of energy, agriculture, infrastructure development and metal industry. In a joint statement issued following the meeting between Russian President Dmitry Medvedev and his visiting Pakistani counterpart Asif Ali Zardari in Kremlin, the two leaders agreed that improved collaboration would help foster strong bilateral ties based on common interests and respect. Both sides hailed the signing of the deal between Moscow and Islamabad on Air Transport plus the Memorandum of Understanding between the Ministry of Energy of the Russian Federation and the Ministry of Petroleum and Natural Resources of Pakistan to enhance cooperation in energy and agriculture sectors.

The post Russia, Pakistan Agree To Boost Investment, Trade appeared first on Politact.

Context
Also known as the Peace Pipeline, or the IPI (Iran-Pakistan-India) pipeline, is slowly moving towards materialization more than 15 years after it was conceived by the Iranian government. However, India is now no longer part of the originally proposed 2,775-kilometre-long 7.5 billion dollar project to deliver natural gas from Iran to Pakistan and India. While Pakistan has finally signed the accord with Iran to build the pipeline, the project still faces numerous hurdles.

One of the important challenges is the insurgency in the province of Baluchistan, from where the pipeline will pass. The Baluch nationalists have frequently targeted the existing gas pipelines passing thorough their territory and as such the security of the pipeline remains a major issue for the authorities in Islamabad. Besides, the project is strongly opposed by the United States and Saudi Arabia, two countries which hold significant influence over Pakistan. Furthermore, the pipeline also impacts the plans of China and Russia and how they view the security of their energy needs.

Therefore, the Iran-Pakistan Gas Pipeline project cannot be understood in isolation. This is a first article in a series which examines the politics around the project by understanding the plans of other major players, to secure their future needs in the region and beyond.

The dynamics around the politics of the gas-pipelines can be understood by the following three factors:

1. Which countries have the gas and energy reserves?
2. Which countries have the most need for these energy reserves, for future development and ambitions?
3. The intermediate countries whose strategic location relative to these energy reserves increases their leverage vis-à-vis the global and regional powers?

Analysis

Dynamics of the project

The Iranian government — holding around 9 percent of the total proven oil reserves in the world and claiming the second largest gas reserves — came up with the proposal to provide gas to Pakistan in the early Nineties after the discovery of natural gas reserves in South Pars fields in 1988. Pakistan and Iran signed a preliminary agreement in 1995 for the construction of the gas pipeline from the Iranian South Pars gas field to Karachi, Pakistan’s main industrial city and port.

The Iranian authorities later proposed an extension of the pipeline from Pakistan to India, a development which New Delhi welcomed in view of mounting domestic energy shortage in that country. Both India and Pakistan are energy deficient. India, the third-largest Asian economy, can produce only half the gas it needs to generate electricity. On the other hand, Pakistan is also facing an acute energy shortage with the result the practice of electricity load-shedding has become a norm in the country. At the same time, Pakistan’s largest gas reserves at Sui, Baluchistan, are fast depleting.

According to US Department of Energy, Natural Gas consumption accounts for 50% of the Pakistan’s energy use. Only 60 percent of Pakistani household presently have electricity, while only 18 percent have access to pipeline gas for heating. According to energy expert Mukhtar Ahmed’s presentation at the Woodrow Wilson Center, the countries energy demand is expected to increase 250 percent over the next 20 years. To meet the demands of the future the countries electrical generating capacity needs to increase from the present 20.4 gigawatts to 30.6 gigawatts by 2010.

South Pars

The South Pars gas field is part of a large gas reserve called South Pars / North Dome field located in the Persian Gulf. It is the world’s largest gas field, shared between Iran and Qatar. This gas field covers an area of 9700 square kilometers, of which 3700 square kilometers (South Pars) is in Iranian territorial waters and 6000 square kilometers (North Dome) is in Qatari territorial waters.

North Pars

In order to monetize North Dome’s vast resources of gas and liquids, Qatar has undertaken ambitious plans for establishment of the world’s biggest LNG (Liquid Natural Gas) and GTL (Gas to liquid) industry. Since 1997, Qatar has been exporting LNG from the North Field. In 2006, Qatar surpassed Indonesia as the world’s largest LNG exporter. Based on the massive gas resources of the field, Qatar is developing the world biggest LNG export facilities.

The Issue of the Pipeline Route

While Pakistan desperately needs gas from Iran, the insurgency in Pakistani Baluchistan province, through which the proposed pipeline would pass, has become critical to the success of the project. When the IPI proposal was first floated in the mid-Nineties, there was relative calm in Pakistani Baluchistan, which had experienced several insurgencies since it became part of Pakistan in 1947. With the killing of veteran Baluch nationalist leader Nawab Akber Khan Bugti by the Pakistan Army in 2006, however, a widespread insurgency has erupted in the Pakistani Baluchistan, the largest province in size.

Baluch nationalists have been demanding political autonomy, while militant organizations have been seeking outright independence. These organizations have been targeting the gas pipelines and power pylons while carrying out targeted killings of non-Baluch people in the province. Incidentally, Baluchistan holds Pakistan’s largest gas reserves and has been meeting the nation’s energy needs since the Sixties. When it comes to jobs, revenue and resources, however, the ethnic Baluch have been discriminated against, helping to fuel the resentment against Islamabad.

The Sea or Coastal route

By the end August 2009, the Pakistan Ministry of Petroleum and Natural Resources had still not come up with a definite route for the pipeline. One proposal was that it should be built along Pakistan and Iran’s coastline, that is, the Arabian Sea. Although this route would be relatively safe from the attacks of Baluch insurgents, it would be very expensive. In the case of coastal route, the pipeline will travel along the Baluchistan coastal areas of Gwadar and Lasbella districts and from near Karachi it will take off for Multan. The Mekran division, comprising Panjgur, Kech and Gwadar districts, is relatively calmer because the top militant leadership has been either arrested or wiped out by Pakistan’s security forces. These areas, which are more or less settled, are mostly inhabited by Gichkis, Rind and Hoat tribes, which are not as fierce as their cousins in the north.

The Central Land Route

The easiest route, because more economically and strategically feasible, is overland through the center of Baluchistan. This was initially, the preferred route for the pipeline. It was proposed that from the Iranian border, the pipeline would enter Pakistan from somewhere in Kharan, just below the Chagai district where Pakistan had carried out its nuclear tests in 1998. Major Baluch tribes, Sajidi and Bangalzai, inhabit these two districts, which is a Barahavi-Baluch mixed area. Now, however, the Baluchistan Liberation Force (BLF) is operative in Kharan, where it has reportedly set up a camp in the Awaran area.

From Kharan, the pipeline was to enter the Khuzdar district, which is a stronghold of the Mengal tribe, the second largest in Baluchistan and up in arms against the government. Two militant organizations, the Lashkar-e-Baluchistan and the Baluchistan Liberation Army, are reportedly active there.

From Khuzdar, the pipeline was to be laid towards the north so it could reach Sui, the town which is the chief source of gas for Pakistan. Unfortunately, all the adjoining districts, including Kohlu, Bolan, Barkhan and Dera Bugti, are filled with militants. In the Bolan district, the Rind and Mengal tribes co-exist, the Mari tribe lives in Kohlu and Dera Bugti is inhabited by the Bugtis, all of them opposed, in varying degrees, to the federal government. The Bolan district is an extremely difficult mountainous terrain and as such, a safe haven for militants.

In sum, the overland route does not seem to be feasible under the present circumstances.

Geopolitics

In comparison to the technical aspects, geopolitics seems more critical in determining the route and the future of IP Project. As alluded above the future of Iran-Pakistan gas pipeline project cannot be understood in isolation i.e., without comprehension of how this project fits in the scheme of US supported Nabucco Gas Pipeline and the Russian North-South Energy Corridor.

The United States wishes to avoid depending on Russia and Iran in the implementation of the Nabucco Gas Pipeline. On the other hand, Russia’s goal is to keep the Europeans dependent on it to satisfy their energy needs so as to create investment opportunities for its oil and gas companies. Russia intends to maintain its leverage and influence on European politics via energy dependence, which will cause headaches for the US and NATO. Thus Russia fights vigorously any efforts to exclude it from the energy infrastructure of the future. China, aware (like Russia and Iran) of the growing American influence in Central and South Asia, also wants to limit the American role.

In this imbroglio, the pivotal factors are who has the energy reserves, who has the dire need for them, the leverage of intermediate countries, and the relationship of all of them vis-à-vis the US, China, and Russia. Each power promotes the route and infrastructure which best serves its interests. How these pulls and tugs play out on a daily basis closely resembles the tectonic plate shifts of the earth. This dynamic becomes even more complicated, as Iran has the second largest gas reserves in the world (Russia is first) and the second largest oil reserves after Saudi Arabia.

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In the present geopolitical situation, two alternatives are available to get Pakistan and India the energy they need. One of them is Iran-Pakistan Pipeline (IP) and the other Turkmenistan-Afghanistan-Pakistan-India (TAPI). United States favors TAPI as it connects well with the Grand Nabucco Pipeline to get Europe the gas it needs, while also eliminating European dependence on Russia. The Trans-Caspian and South Caucus Gas arteries of the Nabucco Pipeline envision sending Central Asian gas reserves westward towards Europe, via Georgia and Turkey, and bypassing Russia. TAPI also substitutes Iran with Turkmenistan as a source of gas for India and Pakistan.

On the other hand, IP pipeline is favored by China and Russia. In April 2008, Iranian President Mahmoud Ahmedinejad declared that his country would welcome Chinese participation in the IP project. He was echoing President Musharraf’s proposal that the pipeline could be extended to China if India backed out of the project. The proposal to carry gas to China through the mighty Karakoram mountain range is not technically viable, however. Analysts believe that the offers extended to the Chinese by Presidents Ahemdinejad and Musharraf were intended to exert pressure on India, which was seeking a way out of the project. India is building a strategic relationship with the US and relations with Iran are becoming increasingly strained.

Meanwhile, China is also competing with Russia and US for Central Asian gas reserves. China has completed the Kazakistan-Iran Oil Pipeline project and has signed a deal with Turkmenistan, offering it $3 billion dollars to build the South Yolotan Natural Gas Field, which is believed to be among the five largest natural gas fields in the world. China’s huge cash reserves have helped to fill the recent vacuum in Russian and Turkmenistan relations. China will obtain the gas from South Yolotan via Uzbekistan and Kazakistan.

Interestingly, there is also resistance within Iran to the IP pipeline. As Tehran increasingly faces energy shortages, some Iranian experts are questioning the feasibility of the project, wondering whether the estimates of gas in the South Pars Field are accurate. In 2008, there were riots in Tehran in reaction to petrol shortages, an ironic development for a country that boasts ownership of the second largest oil reserves in the world. Iran’s oil infrastructure is aging and desperately needs technical assistance in order to upgrade.

China is providing the support Iran needs by investing heavily in reviving its aging oil infrastructure. Iran also needs Chinese help to develop its gas production in the north and south Pars Gas Fields. In 2007, China signed a $2 billion contract with Sinopac to develop Iran’s huge Yadavran oil field, while in February 2008, China’s Off-Shore Oil Company is reported to have signed a $16 billion contract to develop Iran’s North Pars Gas Field. Under the terms of this agreement, Iran will export LNG from the field to China. Furthermore, Russia announced in 2008 that it will explore the huge Iranian Azadegan-North Oil Field, among others.

Acting Pakistan Minister of Petroleum and Natural Resources Asim Hussain confirmed in June 2009 that the US and Saudi Arabia were strongly opposed to the IP Gas Pipeline project. While he did not elaborate, the US opposition to the Peace Pipeline has been known for quite some time now. Washington sees the IP pipeline as a breakthrough for Iran, which has been facing international curbs on account of its nuclear program and obscurantist policies. The Americans are also concerned that the pipeline could bring Islamabad and Tehran closer.

As for the Saudis, the traditional supplier of oil to Pakistan, the pipeline could mean greater Pakistani dependence on Tehran and its influence on Pakistan’s policies. The future of the IP Project also gets impacted by the dynamics of the Shiite-Sunni competitions of the Islamic world. Other than Zulfiqar Ali Bhutto, none of the Pakistani leaders have been able to maintain cordial relations with Iran, Saudi Arabia and Turkey simultaneously.

In August 2009, the US Special Envoy for Afghanistan and Pakistan, Richard Holbrooke, visited Islamabad and proposed offering improved thermal generation as a way to end electricity blackouts in Pakistani cities. Furthermore, to fulfill Pakistan’s energy needs, the Unites States wants to assist Pakistan build its capacity to use LNG, alternative energy resources and hydroelectric projects. This is in contrast to the civil nuclear energy deal the US offered India, of which US firms would be the main beneficiaries. Moreover, as pointed out earlier, by supporting the LNG infrastructure, Pakistan will probably link up better with Qatar, which is fast becoming the world largest exporter of LNG.

The construction of the Peace Pipeline is likely to begin sometime in 2010, when Pakistan makes a final decision on the route. If all goes well, it should be completed within three years. The future of the project is dependent not only on factors like the insurgency in Baluchistan and the growing uncertainty in Pakistan over the fortunes of the ruling Pakistan People’s Party, but also on the tussles of the regional and global players over energy reserves, which are much needed to maintain and increase their global influence. Like the conflict in Georgia last year, insurgencies in Afghanistan and Baluchistan are not immune from the politics of the global energy needs.

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Context

The discovery of large amounts of untapped mineral deposits in Afghanistan, if appropriately utilized in the coming decades, could change the fate of the war-ravaged country. It could have salubrious effects on the whole region and particularly on the Afghanistan-Pakistan relations.

The discovery announced by United States is approximately $1 trillion of worth in untapped mineral deposits, and goes far beyond any previously known reserves. However, the challenges confronted are not just related to mineral extraction but also dealing with the political and security situation of the country. Without a stable political and security environment, no country of the world can be expected to achieve its potential. This analysis of perception and perspective looks at why this news made headlines at this particular time, particularly when the existence of large deposits of minerals in Afghanistan has be known for a while.

Analysis

Changing the Traditional Perception of Afghanistan

Ever since Alexander The Great traversed the region, the traditional importance of Afghanistan is linked to its strategic location. From 17th Century onward, Russia considered Afghanistan both as a buffer region against the British Empire and a route to reach the ‘Warm Waters’ of the Indian Ocean. During the Cold War, US foreign policy emphasized ‘containing communism’ and based on that, Afghanistan had to be protected and prevented from becoming another victim of the feared Domino Effect. Even after the Cold War ended, both superpowers saw Afghanistan largely in military-strategic terms, or as a transit territory for international trade and oil and gas resources of Central Asia.

When the tussles of global players subsided, the regional players also used Afghanistan for its strategic location and extending their ideological interests. Recently, India and Pakistan have wanted to use Afghan territory as a trade or energy corridor to Central Asia, while the landlocked Central Asian countries desire getting access to the seaports of the Indian Ocean via Afghanistan.

Thus none of the global and regional players have ever been interested in Afghanistan for offering a lucrative business or economic opportunity, as it never had any economic strength. Consequently, the Afghan policies of these international and regional players have largely been influenced by the geopolitics of the region, and in it the extremely important geographical location of Afghanistan. Obviously without having a sizable and progressive economy, the state in Afghanistan, which always remained weak, could never be expected to become a thriving modern state.

Lacking the very economic wherewithal, the rural-tribal state with a subsistence economy, could not be transformed into a vibrant and strong state. However, various Afghan monarchs and regimes are themselves to be blamed for invoking and allowing global and regional players to use its territory for the pursuit of their strategies and in conflict with the interests of the Afghan state. They often did this for economic reasons.

In the backdrop of these historical and recent realities, the re-discovery of mineral deposits in Afghanistan is significant. For the first time the world could possibly take interest in Afghanistan economically and would consider the state an end in itself rather than simply a means towards the end. However, to reap any economic benefit from these mineral deposits the global and particularly the regional actors have to shun the military-specific policies towards Afghanistan.

Peace or Conflict

The discovered mineral deposits include huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium. The experts are foreseeing the tapping of the deposits would transform Afghanistan into one of the most important mining centres in the world.

It is important to note that most of the minerals have been discovered in Pashtun-inhabited areas like lithium in Ghazni province and gold in south-eastern Afghanistan. The presence of deposits in Afghanistan’s Pashtun majority areas is indeed important because these are the most impoverished, marginalized and backward in terms of infrastructure and state writ.

Thus the discovery of mineral deposits in Pashtun-inhabited areas can possibly strengthen the Afghan state and pull people from other communities to these areas leading to national cohesion. Had the greater part of mineral deposits or their entire volume been discovered in non-Pashtun areas of Afghanistan, it would have led to serious ethnic tensions and conflicts. The Pashtun majority would have vied for their share in the name of Afghan state, and the other communities would consider it as usurpation of their economic rights.

At the same time, the economic potential of these large deposits of minerals could rejuvenate the Pashtunistan separatist movement. The financial return from the mineral deposits can more than sustain an independent Pashtun state. Thus these mineral deposits could also become a source of stress for Pakistan.

Timing of the Discovery

The timing of the discovery or more aptly the declaration of it at this point also needs to be looked at. It has been known for years that Afghanistan has larger mineral deposits. The news has come just a year before the US forces planned withdrawal from Afghanistan. The development and tapping of these mineral deposits would require years to complete, not possible without relative security in the country. Providing security, technology and expertise, could become the justification for the continued presence of US-NATO forces in Afghanistan. Since the motivation of this presence would be to improve the economic well being of Afghans as oppose to fighting terrorist, winning hearts and minds could become attainable.

The push and pull for the newly discovered mineral resources could be so strong and enticing that it can potentially result in altering the policies of other countries towards Afghanistan. In particular the policies of global powers as well as regional players that have had a stake in Afghanistan could change their political approach. China has already invested $3 billion into Afghan copper mines located south of Kabul. India has also contributed more than a billion dollars towards the development of the country. Pakistan is likely to gain the most due to its proximity and the infrastructure support it can provide. However, in return for offering economic opportunities in Afghanistan for Pakistan based companies, the US is likely to require full cooperation of Pakistan’s military against all brands of extremists, and curtailing of the Iran-Pakistan Gas Pipeline including Pak-China civil nuclear cooperation. The US vision for the region is premised on an India-Centric approach, and is in opposition to Iran and China.

Recently, Afghan President Hamid Karzai has expressed reservations, although in undertones, about the US and NATO commitment and earnestness to bring peace to his war-devastated country. Therefore the declaration of discovery may be an attempt by the US, particularly the Pentagon, to show its commitment to Afghanistan and its development. This will help brush aside any perceptions and perspectives that the US is not dedicated to the country and its population.

The discovery undoubtedly will energize the demoralized Karzai government and average Afghan. At the same time, it gives NATO members under stress of global recession, a purpose to stay committed in Afghanistan. For the first time in its history, Afghanistan would have an inherent economic value, not just based on its strategic location. However, for any country to reach its potential requires dealing with the challenges that impede its growth and those hurdles still persist in Afghanistan.

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