IP pipeline: A win-win game

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IP pipeline: A win-win game

Dr. Jafar Haq-Panaah

IP PIPELINE AND THE ISSUE OF ENERGY SECURITY

The issue of energy security happens to be a part of the energy policy of the countries and has been the main point of concern for the government officials while signing and executing agreements for purchase of energy like oil and gas or electricity. This is also true for the IP pipeline. Energy Security means that the supply of energy does not get interrupted due to political reasons or accidents or crises. The energy security regarding oil and gas pipelines includes two parts interconnected with each other: Security of supply and security of demand.

Security of supply means that the exporter must give a guarantee to the importer that happening of some unpredictable accidents will not causes pause in energy supply. This meaning lays stress upon security of pipelines and their equipments meaning thereby that political decisions as well as other disorder-creating factors like physical factors, war or terrorism must not hinder supply of energy.

Security of energy related to oil and gas pipelines is measured by the following standards:
1. Reliability: This standard refers to trust of consumers on oil or gas exporter.
2. Accessibility: It refers to all political, economic and technological factors affecting continued and constant access of consumers to sources of energy.
3. Availability: It defines presence of enormous sources in surplus and shows the strength of the origin county in creating possibility for energy exports.
4. Affordability: It means reasonability of prices.

GEOECONOMY OF IRAN’S ENERGY

In global power equations, Iran enjoys special geopolitical, economic and geostrategic positions which render it status of important supplier of oil and gas on regional level and beyond.

The central position of Iran in Southwest Asia and it proximity with the Middle East and the Persian Gulf, the Indian subcontinent, Central Asia and South Caucus holds importance. Iran lies in the vicinity of two important centers of oil and gas of the world in the Persian Gulf and the Caspian.

Iran is the holy country which, besides having simultaneously the membership of Oil OPEC and Gas OPEC, has land and maritime borders which 15 countries and has oil and gas sale and / or energy swap agreement with a number of them. Thus Iran may be considered as a country located at the energy heartland of the world.

Besides this important fact that 11 percent of total resources of 160 billion barrels of oil in the world belongs to Iran, Iran’s position in terms of its capability in exploration and export of gas in also outstanding. With having 33 trillion cubic meters of gas, Iran has the second biggest reserve of gas in the world after Russia. As such, in terms of both availability and accessibility, it bears the required standards for ensuring energy security of other countries including Pakistan. It is for this very reason that Pakistan, like many counties of the region and even other regions was willing to buy gas from Iran.

Diversity of consumers and multiplicity of Iran’s gas agreements with various countries show that Iran, in the eye of its customers, also bears the standard of affordability in the field of energy security. Currently, Iran, as per a 20-year agreement, which is also extendable, and after constructing the pipeline, is selling eight million cubic meters of gas to Turkey daily. Possibility of tripling its exports and even possibility of gas to Europe through this pipeline is under consideration.

Some countries of central and south Europe are inclined to be partner in this plan in order to break dependence on import of gas from Russia. Armenia and Georgia are among the new but small customers of Iranian gas in South Caucus region. They have the potential of purchasing 10 million cubic meters of gas per day from Iran. Along with the sale of gas, sale of electricity on batter system to these countries is also going on.

Another customer of Iranian gas in Iraq, an oil producing country. Last year, the first gas pipeline from Kermanshah to Baghdad with a supplying capacity of eight million cubic meters of gas per day and with having the capability of doubling this capacity was put into operation. Another pipeline with the same capacity from the province of Khuzestan to the port of Basra in South Iraq is under construction and is set to be put into operation this year.

Future plans of Iran include the project of sale of gas to Oman through a pipeline to be laid under the seabed of the Oman Sea and the project is under consideration of Tehran and Muscat authorities.

Besides the continuous and dependable sale of gas to other countries such as China, South Korea and India, Iran stands in an outstanding position for swapping oil and gas. Over the last years, besides having the land route for supply of energy to the Republic of Azerbaijan, Iran had had effective cooperation with Turkmenistan and Iraq in swap of oil gas.

These facts show that Iran meets standards of reliability and affordability for the energy security of its neighbors and customers.

On this basis, concerns regarding interruption in energy supply and doubts about its capability in fulfilling the needs of these customers are not justified. Particularly, doubts about Iran’s capability in the face of the unilateral US sanctions are unacceptable. Iran over the last 40 years, has endured various types of US sanctions, but during this period, not only the production and export of Iranian gas not stopped but even increased. It is notable that Iran’s gas exports to Iraq and Caucus actually took place in these very recent years of fresh sanctions, so Islamabad must not be concerned that much.

Another important point is that even the US regional allies do not give that much importance to the US sanctions against Iran and are ready to sign agreement for purchasing gas from this country.

Oman serves as the best example reflecting the future of gas relations with Iran and dependability of these relations. Another example is Turkey. This country is an important member of NATO and is an old US ally in the region. But this country, since many years, with saving its sovereignty and with having its own interests in mind, is not only continuing purchasing of oil and gas from Iran but has also expanded its trade and political and economic relations with this country by giving priority to benefits of this cooperation over the US sanctions.

These two countries, besides the US opposition, are willing to expand their trade relations from the current level of 13 billion dollars to 30 billion dollars by the next five years and they are set to reach that goal of bilateral interests.

The interesting point, which may be an eye opener for the IP also, is that export of gas from Iran to turkey never came to a halt, even differences and regional rivalries between Tehran and Ankara were on its peak.

This fact reminds of dependability on Iran in the field of energy. Another point regarding this pipeline is that despite sabotaging activities by terrorist groups and carrying out explosions and destruction of pipelines by them during the years of 2013 and 2014, exports of gas did not witness a serious pause and Iranian experts have achieved a good experience in managing such crises.

This experience along with the high potential of police and military security forces of Iran in ensuring security can provide more comfort to the government of Pakistan with regard to the future of the IP.

Another example of ineffectiveness of the US sanctions in energy cooperation between Iran and its neighboring government can be drawn from the agreements signed between Tehran and Baku during the visit of the President Rouhani to Azerbaijan in March 2018. During this visit, some important agreements were signed by authorities of the Iranian oil ministry and their Azerbaijani counterparts for exploitation of common oil and gas resources in the Caspian Sea.

This happened despite the fact that the Republic of Azerbaijan is known as a US ally and the US authorities have always shown displeasure over Tehran. Baku relations and have hindered it. All these facts prove that the US interventionism and its negative design on Iran Pakistan gas pipeline cannot be useful.

Mean while, it must be noted that the IP pipeline will not only have economic importance but it can also provide a base for enhancement of bilateral cooperation in other fields, based on mutual respect and interest. Notably, the US concern is based on this very fact that the gas pipeline must not become a ground for Iran Pakistan cooperation on other political and security issues which still remain unresolved due to American interventionism, to the detriment of the nations and government in the region, particularly Iran and Pakistan. Here, a refer can also be made to the continued crisis in Afghanistan and expansion of extremism and terrorism, a part of which, at least, results from the interventionist policies of the US in the region.

The successful experience of cooperation between Iran and Turkey in managing some regional crises such as stalling division of Iraq by the government of the Kurdistan region and establishment of regions free from tension in Syria shows how strong economic relations and its expansion particularly in energy cooperation can be a determining factor. The IP gas pipeline can put Iran and Pakistan on this very route.

CONCLUSION

Seemingly, bilateral regional and international factors may determine the facts of the IP gas pipeline. At the bilateral level, no such difficulties are visible. Had it be there, Islamabad could not be ready for signing the gas agreement.

It was a conscious and wise choice by Pakistan leaders for fulfilling the domestic needs by importing energy from a dependable, secured and satisfying source, which still enjoys priority despite introduction of other transiting routes. 70 years of peaceful coexistence and friendship between the two nations and governments are the reason for that. Some of the differences and technical difficulties with regard to how the remaining parts of the pipeline could be laid inside Pakistan and pricing is not that much difficult and resolution of them depends upon the will and resolve of the two sides.

The fresh moves in the bilateral political and economic relations give hope. For the first time, during the year 2017, the volume of trade exchanges reached the level of 1100 million dollars. At the international level, the US opposition to the project will continue , however as it failed in stopping Iranian gas exports at the regional level including its gas sales to the US allies and friends in the region such as Turkey , Azerbaijan, Iraq and Oman, it is unlikely that Washington’s opposition would prove effective in the case of IP.

As some governments in the West Asia region have successfully resorted to attaining more sovereignty in foreign policy and keeping distance from the US, the same is also expected from Pakistan– keeping distance from the US and fighting out the US pressure over the IP gas pipeline. This distancing and protection of sovereignty with prestige and credit and defending Pakistan’s position as a regional power which has been a victim of dual polices of the US in fight against extremism and terrorism and which even does not compel Washington to execute its international commitments like JCPOA is much more important.

The overall conclusion from all these dispensations is that one should be optimistic about execution of the IP gas pipeline and one should not lose hope for a bright future for the energy relations between the two countries, which is achievable through positive roles of the national authorities in decision making of Islamabad.

The writer is a professor of political science in the Dept. of Regional Studies, University of Tehran, and a member of the Board of Directors, Iranian Association of Regional Studies.