Thursday, May 31, 2012

Zioconned America's ambitions to thwart Russia and block Iranian gas....

Zioconned America's ambitions to thwart Russia and block Iranian gas....

India struggles with ZIOCONNED pipeline geopolitics....

By Zorawar Daulet Singh

NEW DELHI - India spends more than U$400 million each day on oil imports which account for 70% of its oil consumption. For a country facing such high dependence on outside sources so early in its growth trajectory one would expect securing reliable and long-term supplies would be at the forefront of the development and foreign policy agenda.

And yet, Delhi seems to be expending diplomatic and political resources in a direction that would baffle even the most optimistic observer. Last week, the union cabinet affirmed India's participation in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) 1,700-kilometer pipeline, which envisages a flow of gas from Central Asia into the Indian heartland.

While Afghanistan and Pakistan committed to the security of the pipeline in a December 2010 Inter-Governmental Agreement, the transit zone involved in the TAPI case is now widely acknowledged as the most tumultuous region in the world.

In Afghanistan, though the Kabul regime has received extensive international aid and military support, it is by no means assured that the state will acquire a wherewithal that can ensure the uninterrupted flow of a strategic resource like natural gas across 735 kilometers of southern and western Afghanistan, the hotbed of Pashtun resistance.

In Pakistan, the problem is magnified because the state's capacity is weak and compromised by an ideology that is repulsed by the idea of any interdependence with India. Further, the military - the most vital state organ for underwriting the security of the 800-kilometer transit route - is nurtured by a strategic culture that strives to acquire new leverages vis-a-vis India. To place India's energy security in the hands of an institution that has rarely been bound by international agreements would be strategically irresponsible.

So, why is this project being pursued? Perhaps, it serves to underscore India's hope for a seamless flow of resources across the greater South Asia region. It might also be good public diplomacy as India exudes the right notes for a region condemned to irresolvable territorial conflicts.

Indeed, the US State Department spokesperson summed up US interest in this project, "You've got new transit routes, you've got people-to-people links, you've got increased trade across a region that historically has not been well-linked, where there have been historic antipathies which are now being broken down by this positive investment project."

Few can dismiss such grandiose rhetoric. But to assert that the TAPI pipeline "is a perfect example of energy diversification" as the US official did, is going too far. What it actually reflects is America's dual strategy to break the Russian monopsony on Central Asian gas and prevent the flow of Iranian gas eastward. Concern for South Asian energy security was probably an afterthought.

The pursuit of energy security is a serious endeavor and cannot be driven by or become hostage to ideological or optimistic projections of international politics. Surely, there are other more benign means to test the prospects of Central-South Asian camaraderie? A two-way flow of less strategic merchandise and people could be a start.

If energy security is a national concern, Delhi should be pursuing a geostrategy that is based on a more sensible comparative assessment of the potential lines of communication to the energy starved Indian heartland.

The severing of India's natural lines of communication to the resource wealth of Central and West Asia was one of the great tragedies of partition. In many ways, India's post-1947 foreign policy has struggled to overcome the geopolitical consequences of 1947 after which India became a prisoner of geography unable to forge continental geoeconomic or geopolitical links with its western periphery and beyond.

Fortunately, peninsular India has historically always provided options to craft maritime lines of communication between India and the world. Indeed, over 90 percent of India's trade and all of its oil imports rely on maritime transportation networks. Thus, it is only logical for India to explore maritime energy routes.

In 2009, Gas Authority of India (GAIL) entered into a Principles of Cooperation agreement with South Asia Gas Enterprises (SAGE) to explore the technical viability of laying a deep-sea pipeline from West Asia across the Arabian Sea to India. According to SAGE, the cost of a pipeline from Oman to India, a project first studied in 1995, would be $4 billion (TAPI is estimated at $8-10 billion).

The gas tariff would also be lower since transit or security costs become negligible. Oman's access to the Arabian Sea makes it a natural export hub for gas-rich states like Qatar, Turkmenistan and Iran. A direct coastal pipeline from Iran to India is not only technically challenging given the depth and turbulence of the Indus Canyon, but would also require Pakistan's acquiescence since it would traverse near the latter's exclusive economic zone.

In March 2011, the union petroleum minister stated in the Rajya Sabha (Upper House), "So far technical feasibility of the [Oman-India] project has not been established" and "not much progress has been made since" mid-2009. Has India's inability to de-hyphenate its Tehran ties from its US-policy reduced the attractiveness of this project?

Russia's strategy of systematically investing in routes that bypass politically volatile or unfriendly transit states can serve as a lesson for India. In 2005, Moscow and Berlin came together to collaborate on a project that sought to overcome the financial and geopolitical costs of transiting large volumes of natural gas through Central and Eastern Europe.

Until recently, 70% of Russian gas was transiting through Ukraine and Poland. The 1,200-kilometer Nord Stream sub-sea pipeline network, which became operational in 2011, has directly connected Eurasia's largest energy supplier to the economic heart of Europe through the Baltic Sea.

India's proximity to energy rich West Asia is a geopolitical advantage that most nations can only aspire for. Lines of communication, however, do not just arise spontaneously but are always the outcome of sustained political, economic and even military commitment to specific routes that are deemed stable and relatively inexpensive to sustain. This is the essence of geostrategy.

Moreover, advancement in offshore technologies and high hydrocarbon prices has made deepwater pipelines a viable proposition. Finally, the growing capabilities of the Indian navy will only complement a political initiative to pursue a sub-sea link between West Asia and India's west coast.

It would be absurd if public diplomacy that is apparently guiding Delhi's calculus on TAPI deflects attention from the more urgent need for a secure maritime energy line of communication to India's economy. A subsea pipeline deserves more than a perfunctory assessment.

Zorawar Daulet Singh is Research Fellow at the Center for Policy Alternatives, New Delhi.

[Why are India's leaders befouling their own reputation by fronting an American fraud, whose only outcome is the creation of false hope? What does India have to gain by serving as a party to this intricate fraud? India must reject these fraudulent American schemes before they can play-out, if they want to survive the major conflict which lies at the end of this road. When Pakistan finally realizes that there is no gas coming from Turkmenistan, and they have allowed themselves to be blackmailed into rejecting Iranian gas, there will be hell to pay. India will stand alone as the guilty party, at that time, to remind the Pak Establishment that India remains Enemy Number One.]

Despite India, Pakistan and Turkmenistan signing an agreement for the Trans-Afghanistan pipeline, it faces many hurdles before it can become a reality, says Shebonti Ray Dadwal.

On May 23, GAIL India, Pakistan’s Inter State Gas Systems and Turkmenistan’s state gas company Turkmengaz signed the General Sales Purchase Agreements for the ambitious transcontinental gas pipeline project which would see Turkmen gas being delivered to India and Pakistan via Afghanistan in 2018.

Interestingly, Turkmenistan and Afghanistan signed only a MoU for cooperation in the gas sector, leaving the signing of a GSPA till negotiations on prices were agreed upon.

The 1,700-kilometre pipeline, once constructed, will transport some 90 billion cubic metres of gas per year for 30 years from Turkmenistan’s giant Galkynysh field to energy-hungry consumers in Pakistan and India as well as relieving shortages in Afghanistan.

Despite the euphoria and the media coverage, one can’t help but wonder whether the project will eventually see the light of day. No doubt, the fact that the project has received robust support from the ZIOCONNED USA does allow for some optimism...LOL (the Baku-Tbilsi-Ceyhan pipeline was pushed through by Zioconned Washington despite innumerable technical, commercial and security hurdles).

The Zioconned US has done everything it could to ensure that the project becomes a reality, from getting the Asian Development Bank’s technical and financial support and projecting it as a harbinger of regional peace and prosperity, to thwarting the rival Iran-Pakistan-India pipeline project.

Neither can one deny that when, and if, the pipeline is constructed, it will not only provide India with access to Central Asia’s vast energy resources, but will also allow the latter to diversify their market away from Russian and Chinese dominance.

Nevertheless, there are several reasons to believe that the project remains a chimera. First, the pipeline will go through 735 km in Afghanistan (Herat and Kandahar) and Pakistan’s Baluchistan (Quetta) which remain conflict-ridden, before going on to Multan and Fazilka in India.

After NATO exits post 2014, the instability in these regions may worsen, notwithstanding the Afghan government’s assurance of an ‘understanding’ being reached with the Taliban.

Second, in 2008, the project cost was estimated at $7.6 billion (about Rs 41,800 crore). By the time the pipeline is laid, the cost is expected to be around $10 billion to $12 billion (about Rs 55,000 crores to Rs 66,000 crores).

Moreover, India will have to pay almost $13/mmBtu ($9.7/mmBtu to Turkmenistan, 50 cents/mmBtu to Afghanistan and Pakistan as transit fees and $1.83/mmBtu as transportation charges), which is lower than the $16/mmBtu paid for imported LNG, but far higher than domestically produced gas at $4.20/mmBtu.

Moreover, although ADB has helped in coordinating and facilitating the project’s negotiation process over the past 10 years, it is funding only a small part of the project which has the onerous task of attracting commercial partners to build, finance and operate the pipeline, something that will be difficult given the unstable environment in which the pipeline will traverse.

Third, with India’s share of the piped gas being 38 million cubic metres — with Pakistan getting the same amount and Afghanistan getting 14 million cubic metres — it will do little to satisfy demand that is projected to reach some 473 million cubic metres by 2017.

Fourth, while British auditors Gaffney, Cline and Associates, has ranked the Galkynysh field the world’s second largest, with reserves pegged between 13.1-21.2 trillion cubic meters, doubts have been raised regarding Ashkabat’s ability to ensure uninterrupted supplies for 30 years, given that Turkmenistan has committed gas supplies to Iran, Russia and China.

In fact, during Turkmen President Gurbanguli Berdymukhamedov’s visit to Beijing in November 2011, it was agreed that Turkmenistan would double supplies up to 65 billion cubic meters of gas annually to China.

Similarly, doubts have been raised regarding Turkmenistan’s ability to develop sufficient production, even if it does indeed have the requisite reserves, as well as develop its transport infrastructure, which is currently dependent on Russia’s pipeline infrastructure.

Fifth, the role of China and Russia as potential spoilers is an issue that needs to be looked at. Russia’s policy of using its pipeline network as an instrument to force recalcitrant neigbours to fall in line is well documented.

Moscow has often manipulated events to ensure that its former Soviet satellites do not succeed in gaining independent access to diverse markets. And with Gazprom having indicated its interest in being associated with the TAPI project, along with US firms ExxonMobil and Chevron, one cannot rule out Russian interference if Gazprom is not accommodated in the project.

At the same time, Beijing has made it clear that Central Asia is a key factor in its energy security policy and strategy, as it provides an alternative to its sea-based energy supplies. Like Russia, it may prefer the Central Asian countries to be dependent on its market. To ensure that it gets preference over other contenders, China has shown its readiness to pay premium prices for its energy supplies.

Given that pricing is a major factor in India’s energy import decisions, Beijing may exploit it as a means of weaning away the Central Asian suppliers from its South Asian competitors.

Sixth, for a pipeline project to be successful, four key elements are crucial: 1. A strong sponsor; 2. Sufficient reserves; 3. Economic and commercial viability and 4. A secure market. While TAPI has a strong sponsor in the US, the other three components have raised some concerns.

While Turkmenistan’s ability to ensure 30 years of supply is not assured, the project’s commercial viability is also in doubt.

Given the security of the TAPI project route, which in turn would necessitate an escalation in costs, it would make it very difficult to find any financier or insurance underwriter to participate in the project, US political support notwithstanding.

Moreover, even if the pipeline becomes a reality, it is likely to be a high-value target for religious extremists in Pakistan, who will ensure that no energy supply enters India through their territory.

And finally, with India perceived as a critical pillar of the project in terms of its market size, the pricing of the gas would be critical.

Given the disparity in pricing between domestic and imported gas, this could become a spoiler in the future, particularly if the price of gas falls in the international market due to the availability of abundant unconventional or shale gas in the near future.

Shebonti Ray Dadwal is an energy security specialist and a Fellow at the Institute for Defence Studies and Analyses.

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