China’s entry into pipeline politics

Pakistan and China have signed a deal on the construction of the much-delayed Iran-Pakistan (IP) gas pipeline, a project that has been strongly opposed by the US. It is not merely the nuclear issue with Iran because of which Washington opposes a pipeline carrying Iranian gas; the US opposition is the part of the global energy game. With China’s exclusive entry in the IP project, the game is going to take a new turn. China has reportedly agreed to build the 700km portion of the IP pipeline on Pakistani territory and provide a loan to finance 85 per cent of the project’s estimated cost of $1.8 billion. Tehran has already built the 900km part of the pipeline on its territory leading up to the Pakistan border. The pipeline will run from Gwadar to Nawabshah where it will be connected to the country’s existing gas-distribution pipeline network.

Chinese participation has revived the IP pipeline project, which had virtually died in December 2014 when Pakistan had failed to meet the deadline set under a Pakistan-Iran deal for materialising the project, due to financial constraints and stiff opposition by the US. The project was originally conceived in 1993 as the Iran-Pakistan-India (IPI) gas pipeline or peace pipeline. In 2009, India withdrew from the pipeline project after securing a civil nuclear deal with the US. Now, China’s participation in the project actually heralds its entry into pipeline politics. This will activate different players in the murky politics of energy pipelines shaping the geopolitical landscape of the region in the near future.

The US opposition to the IP pipeline project largely owes to pipeline politics. The US wants a pipeline from Central Asia for energy-deficient South Asian markets. Hence, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline is being strongly backed by the US. China’s entry in the IP pipeline is actually the part of the TAPI versus IP fight. With a strong hold over the Turkmen gas reserves, Russia opposes the TAPI pipeline and supports the IP one. China and Russia seem to be on the same page in this regard. Completion of the IP pipeline will pave the way for construction of the Iran-Pakistan-China (IPC) pipeline. China plans on importing gas from Iran by extending the IP pipeline to its western province of Xinjiang via Pakistan. India will have to change its position of running with the hare and hunting with the hounds if the IPC inches towards reality.

The US opposition has, so far, been a major factor for delays in the construction of the IP pipeline. If Islamabad hopes that Iran’s upcoming nuclear deal with the US will ease sanctions against Iran and will allow it to pursue the IP pipeline project, then there are only nominal chances of that happening. During recent energy talks between the US and Pakistan, the US Special Envoy for Energy, Amos Hochstein, called for putting the pipeline project on the back burner and urged Islamabad to focus more on TAPI.

Coming to the IPC pipeline, it is part of the $46 billion China-Pakistan Economic Corridor (CPEC). The CPEC will link Gwadar with China’s far-western Xinjiang region through a well-planned network of highways, railways and energy pipelines. Development of Gwadar will open up an energy corridor from Central Asia and the Gulf, across Pakistan, to western China. For China, a strategically located Pakistan will be the key node to build an energy corridor linking the oil fields of Iran and Iraq with the Chinese market.

The proposed IPC pipeline, however, will have to traverse the very difficult terrain of Gilgit-Baltistan (bordering western China) in the country’s north and restive Balochistan in the south. A stable Balochistan is essential to the success of any trans-regional gas pipeline project, as greater part of the pipeline will have to traverse the volatile province. In case peace and stability are not restored in the province, the IP and the IPC projects are likely to meet the same fate as the TAPI pipeline project, which is still in the doldrums due to the uncertain security situation in Afghanistan.

Published in The Express Tribune, July 1^st,  2015.

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