NEO – Pipeline wars heat up in Eurasia

TAPI: Prospects and Challenges

by  Natalya Zamarayeva,    …. with New Eastern Outlook,  Moscow

The seven golden domes of St. Petersburg

[ Editor’s Note: This is Natalya Zamarayeva’s first crossing posting from NEO to VT. She is a PhD senior research fellow at the Department of Pakistan, Institute of Oriental Studies, NEO’s main patron.

As we look back on our relationship with NEO which is in its third year, we both have come a long way in the breadth and depth of material and events we are now covering.

The timing was perfect, as we ended up in the middle of the West’s New Cold War against the independent Asian economies, to suck their economies, like a black hole, into the vortex of our own Federal Reserve Ponzi scheme.

Much of our coverage has been on the accelerated progress Eurasian countries have made to settle past differences to stand shoulder to shoulder against the Western, primarily US, sanctions monster whose foreign policy looks more and more like the simplistic Bush(43) one, “You are either for us, or against us”. Asian countries have been circling their wagons.

But rivalries still exist, particularly in the high-stakes energy pipeline business because for those who get there first, the prize can be a multi-generational monopoly on energy supplies for an entire region. The battle between Iran’s project and Turkmenistan TAPI pipeline has turned into a classic regional economic battle.

Iran has been caught in the middle of this after having jumped out in front of the pack to quickly build a pipeline over its territory to the Pakistani border, based on pledges from Islamabad to complete its interior portion. The US put the squeeze on them to delay the project, plus none of the needed financing appeared.

Pakistan has been in a desperate need for natural gas for its industry, because so many of its people struggle on part time income due to factory jobs that only run three half days a week, due to energy shortages.

It appears that Pakistan has backed out of the Iran arrangement at the urging and deep-pocket financing of the Chinese, who may have preferred a Turkmenistan flush with long term gas earnings, which can be invested in the New Silk Road, which will be the largest construction project in the world for possibly the next 50 years. The key to its viability is the creation of new booming economies along the route.

The Baluchistan Republican Army is experienced at pipeline bombing

Russia has also been a competitor for the future Asian pipeline business, having inked a major one with China, which will hedge against decreases in Moscow’s EU gas sales due to political and NATO maneuvering.

But Moscow has been unhappy with the TAPI project, having recently given notice it will stop buying Turkmenistan gas so as to not be funding its own competition.

But the biggest wild card in all of this will be the pipeline route going through the heart of Taliban country, a place where warring parties are known to hold up any and all businesses for payoff shakedowns to fund their revolts. In the pipeline world this usually involves “insurance” payoffs to NOT attack the pipelines, and the insurance can have escalating premiums once the pipeline is a hostage to a militant party.

Once the gas crosses over into Baluchistan, another unstable area in Pakistan, and depending on whether that area receives the development boost it needs, we might see the pipeline running a gauntlet of bombing attacks. The current partners might be wishing they had chosen the Iranian pipeline five years from now.

We shall hope that peace prevails and dependable energy supplies can trigger the economic improvement needed to boost domestic economies, with rising consumer spending to help solve the social and religious competition in the areas between the haves and have nots… Jim W. Dean ]

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– First published  …  December 21, 2015 –

Pipelines are easier to blow up than they are to build

Turbulent changes have of late become a common characteristic on the Asian continent. Since the conclusion of a military campaign by the coalition forces of the US / NATO in Afghanistan in December 2014, as a part of their anti-terrorism campaign, major infrastructural, economic and hydrocarbon projects have been radically taking place in West Asia.

To begin with, in March 2015, there was the Chinese-Pakistani economic corridor worth 46 billion USD, and in addition, in December of this year, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline was approved, thereby confirming the intentions of this region to exchange geopolitics for geo-economics.

The groundbreaking ceremony of the TAPI gas pipeline was held in Ashgabat on December 12, 2015, the four parties being represented, respectively, by President G. Berdimuhamedov, President Ashraf Ghani, Prime Minister Mian Muhammad Nawaz Sharif and Indian Vice President Mohammad Hamid Ansari.

The conference was titled “A policy of neutrality: international co-operation for peace, security and development” and was held as part of the International Conference convened in Ashgabat to celebrate the 20th anniversary of Turkmenistan’s Permanent Neutrality. All in all, despite questions being raised by the worldwide press in the past regarding the skepticism addressed towards the hydrocarbon projects, the event was successful.

Let’s briefly recall the famous original data on the TAPI project (according to materials from the Pakistani press). The length of the pipeline is 1,735 km (1,084 miles), the project costs is $ 10 billion.

Construction started on schedule on December 13, 2015, the commissioning is expected by August 13, 2016, while the completion of the entire pipeline is scheduled for December of 2018. According to the project’s documentation, 33 billion cubic meters of natural gas will be pumped through it annually during its thirty-year service.

Turkmenistan to commission major Galkynysh field in 2013

Gas will be drawn from the Turkmen oil fields in Galkinish, the second largest reservoir of natural gas in the world. Then across more than 700 km of Afghan territory from Herat through the southwestern provinces, then farther south toward Kandahar, after which the line moves in the direction of the Pakistani province of Baluchistan.

The gas distribution station, located near the Pak-Afghan border, will then pump the gas into two separate pipelines: the first will veer sharply to the south, in the direction of the Pakistani port of Gwadar, Strait of Hormuz, from where the Turkmen gas will be transported to tankers and then sold on the international market; the second line will be for domestic consumption in Pakistan, and will also run in the direction of India.

At the initial stage, the pipeline is planned to pump up to 27 billion cubic meters of gas, 2 billion of which is to be bought by Afghanistan. Pakistan has also signed an agreement on the withdrawal of gas at the rate of 1,325 MMCFD (million cubic feet per day).

According to the participants in the ceremony of laying the first stone of the TAPI construction, the TAPI project has two objectives, one economic and the other political. The first is to meet the growing need of energy among the 2.3 billion inhabitants in South Asia and China, while the second is to reduce tension and contribute to the normalization of relations in the region. Indian vice president H. Ansariposhel says that TAPI is “more than a project”, describing it as “the first step towards the unification of the region.”

Back at the beginning of November, it would be hard for non-experts to believe in the implementation of this project. The realization of the project was threatened by two challenges: instability in Afghanistan and the failure of bilateral dialogue between New Delhi and Islamabad.

Pakistani retired General Janjua is now the National Security advisor

Making TAPI one of its priorities, Pakistan is quickly and dramatically changing existing approaches to solving complex issues with its neighbors, and firmly strengthening its control over Afghan and Indian foreign policy vectors, all the while acting on the advice of National Security advisor, retired General Janjua.

The General also held a series of talks with Afghan and Indian delegations in Paris, Bangkok and at the fifth Ministerial Conference Heart of Asia-Istanbul process in Islamabad in December 2015.

An armed spring/summer attack on Kabul by the Afghan Taliban, the concentration of armed opposition forces and international terrorist organizations such as LIH and Al Qaeda and a series of audacious terrorist attacks (the assault and capture of Kunduz by the Afghan Taliban in October 2015 and an armed attack by militants on the Kabul airport in late November 2015) have all called into question the possibility of bringing the security situation in the inner Afghanistan under control.

The actions of the armed opposition were further aggravated in July by the failure of talks between official government authorities and representatives of the Afghan Taliban Movement, and later, in the fall, by the inability to push a single nominee from the Taliban to negotiate with the central authorities.

But the main issue is not with the level of unity or disunity in the ranks of Afghan fighters, but in the so-called neutralization of one of the main demands of the Taliban – the abolition of the constitution of the Islamic Republic of Afghanistan and the introduction of Sharia law in the country.

Years of international anti-terrorist campaigns, from 2001 through 2014, have served to strengthen the Taliban into becoming an independent military and political force, which made both the administration of Afghanistan and domestic and global capitals consider it as a viable counterparty.

As a result, the ceremony of laying the first stone of the construction of the TAPI gas pipeline was made possible thanks to arrangements made by political and military forces in the region with the Afghan Taliban.

Defense Minister of the central government in Islamabad Khawaja Asif confirmed that, in order to ensure the safety of the pipeline passing through the territory of Turkmenistan and Afghanistan, his government would use its influence on the Afghan Taliban, as it also meets the national interests of his country.

He also recalled events from the 1990s, when the Taliban government negotiated with the US company Yonical, providing security guarantees for a similar pipeline. Kabul and Islamabad are convinced that the Afghan Taliban does not oppose the TAPI project, as it is important for the financial stability of Afghanistan and, therefore, none of the groups intend to impede the project.

But another question arises – on what terms did the Taliban agree to play this game involving hydrocarbons?

Another welcome development was the participation of Deputy Prime Minister of the Republic of India Mohammad Hamid Ansari in the ceremony of laying the first stone in the construction of the pipeline in Ashgabat. In October and early November, both Islamabad and New Delhi rejected even the possibility of holding talks at the level of foreign ministry secretaries, each pushing their own terms; but as of December 2015 the parties will jointly push the start button in Ashgabat.

Pakistani-Indian relations on the whole have also experienced major changes. Islamabad, due to insistence from the Indian side, has ensured the acceleration of judicial processes in the investigation of the terrorist attack in Mumbai in 2008, which, as alleged by New Delhi, was organized by Pakistan, while Islamabad also has conceded to soften its position concerning Kashmir.

Nawaz Sharif – A successful pipeline deal that works will be his legacy

TAPI is extremely important to both modern day Pakistan and personally to the head of the cabinet of ministers of the central government, Nawaz Sharif:

70% of energy needs will be met by this project, while saving up to $ 1 billion every year. This will implement the slogans of the prime minister’s campaign of 2013, such as eliminating numerous hours of blackouts and stimulating the development of certain other sectors of the economy;

– It confirms Pakistan’s viability as a leader not only daring to break into the nuclear club of world powers (1998), but also to be the first civilian and military leaders in Islamabad to guarantee the supply of hydrocarbons to the country on a consistent basis.

A diplomatic breakthrough in Islamabad, visits by Prime Minister Nawaz Sharif to the Central Asian republics in the spring and autumn of 2015 and unofficial talks with the leaders of Afghanistan and India in various international forums demonstrate that these results have been achieved. But we must still await the first gallon of Turkmen natural gas, or the first drop of Iranian crude oil.

Natalia Zamaraeva, Ph.D., Senior Research Fellow, Department of Pakistan Institute of Oriental Studies, exclusively for the online magazine “New Eastern Outlook“.

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