Energy Solutions for Pakistan – TAP vs IPI

Print this Report

IRAN PAKISTAN GAS PIPELINE PROJECT

Engineering and Project Management Consultancy Services

Client:            Interstate Gas Systems (Pvt) Limited. (ISGS)

Inter State Gas Systems (Private) Limited (ISGS) was established in 1996 as a private limited company incorporated under the Companies Ordinance 1984, on the direction of the Economic Coordination Committee (ECC) of the cabinet in June 1995, while considering the proposal for Import of gas from Iran.

Consultant:

A joint venture between

ILF Beratende Ingenieure GmbH(Germany)

and     National Engineering Services Pakistan (Pvt) Limited

Purpose of the Project:

The purpose of the Project is to install all required facilities such as pipeline, compressor stations and all other related equipment to transport 30MMcmd (1.0 bcfd) natural gas imported from Iran to Pakistan.

The pipeline shall be constructed on-shore from the delivery point (“Mile 250”) at the Pakistan-Iran border to the point at which the gas is injected into the national gas trans-mission system in Pakistan (Nawabshah).

Responsibilities:

ILF Germany are the pipeline designers and NESPAK is taking up the feasibility of the pipeline route in Phase-1 and construction supervision of civil and allied structures in Phase-2.

General Description:

The task will be completed in 14 months, after which work on the second stage will begin with actual construction of the pipeline, scheduled to be completed by December 2014.

The pipeline will connect Iran’s giant South Fars gas field with Pakistan’s Balochistan and Sindh provinces.

Pakistan will construct about 800 km long pipeline from its border passing through the Mekran Coastal Highway to connect with its existing gas transmission network at Nawabshah.Iran will build 300 km long stretch from Iranshahr to Pakistan’s border through Iranian port of Chabahar.

 On completion, 5,000 megawatts of electricity will be generated through this gas, which is equivalent to peak shortage of power at present.

Development Milestones of IPI

Expert comments on IPI

1.    First stage is the Feasibility stage under which several tasks are being carried out, like Field Geotechnical Studies, Topographic Survey, Environmental Studies, GeoHazard Studies, Hydrological and Hydraulics, Logistics Study etc etc etc. Most of these studies are NEAR COMPLETION. We do have some delay but NOT MORE THAN 10-20%. The Prime reason for delay had been inadequate provision of security (FC, Levies & police).

2.    YES, considering the present pace of works, we expect no significant delays and timely completion of works is expected. End of feasibility by August, 2012 and handing over of pipeline to Government of Pakistan in early 2015.

3.    There seems to be no apparent "Technical" reason to lack behind except "non-technical" reasons like undue interference from certain elements, non-payments to consultants and/or contractors, foreign influence etc. However one important thing to know is that there is NO OTHER PROJECT IN PAKISTAN at present which is able to generate about 5,000 MW of electricity in just next two years EXCEPT IPI PROJECT.

4.    The gas which is going to be imported through IPI is crude gas and only for industrial use. Any lack of implementation of this project is likely to cause acute shortage of gas and electricity and would only add to miseries. The scenario is not hard to imagine if we are not able to get more resources in next few years.

5.    It is difficult to right away quantify the financial comparison between TAPI and IPI, but for sure IPI is a much quicker solution and more secure. TAPI would mainly pass through Afghanistan and securing a large diameter pipeline may be an issue. Completion time of TAPI is much longer than IPI.

 Media Report

 Pipeline Diplomacy With Iran and Pakistan – The Huffington Post

8 Mar 2012

The Obama administration continues to be chagrined with Pakistan and yet has asked Congress for $1 billion in assistance with energy infrastructure projects in the country this past week. How could this be countenanced in times of economic stress and ostensible Pakistani defiance of U.S. demands on counter-terrorism? Secretary of State Hillary Clinton explained before a House Appropriations Subcommittee on Foreign Operations that the requested funds were aimed to assist with a gas pipeline project from Turkmenistan to Pakistan via Afghanistan. The alternative,she feared, was that Pakistan would choose to buy gas from a pipeline being built by Iran with financial support from the Chinese Export-Import Bank.

In her testimony, Secretary Clinton also warned Pakistan that the Iran Sanctions Act could be applied if it went ahead with the project. However, the application of this law is at the discretion of the U.S. authorities since Turkey already has a functioning pipeline with Iran, passing through its conflict-ridden Kurdish region, and yet no sanctions have been applied against this important NATO ally. The Iran-Turkey pipeline also exemplifies how security can be maintained along pipeline corridors in conflict zones. Threatening Pakistan with sanctions over an energy project with Iran will only worsen U.S.-Pakistan relations and make it even more likely that the country will espouse more malevolent partnerships.

For Secretary Clinton to follow such a zero sum game of energy diplomacy is troubling, as it misses an opportunity for improving U.S. relations with both Iran and Pakistan. The energy demand in Pakistan, and further along the pipeline route, in India, is so large that both projects from Turkmenistan (TAPI) and Iran (IPI) could be viable. Both pipelines provide a promising outlook for the entire region if managed properly.

Afghanistan may earn as much as $100 million per year from transit fees from the TAPI pipeline. Despite the high prices for gas Iran is offering to Pakistan, the IPI pipeline could savethe country between $652 million and $1.17 billion annually, depending on the price of oil. This is about the same amount as the Kerry-Lugar legislation would deliver in non-military aid each year to Pakistan. Government reports suggest that Pakistan currently has an energy shortfall of between 3000 and 4000 megawatts (MW), while India's shortfall is estimated to be between 15,000 and 20,000 MW. Moving forward with the two pipeline projects could also help improve relations between India and Pakistan which the U.S. should undoubtedly encourage.

The biggest hurdle to the success of either pipeline project is the transit route through Pakistan's troubled Balochistan province where a separatist insurgency has been brewing for many years. Much to the annoyance of Pakistani authorities, this insurgency received some unexpected support from Congressman Dana Rohrabacher of California who is introducing a congressional resolution to support self-determination in the province. The pipeline prospect could provide a way for the US to engage the Baloch nationalists in a constructive way, and put pressure on Pakistan to meet their legitimate demands for economic benefits from such a project.

Instead of using the old divisive game of cold war politics where Pakistan would be forced to choose between the U.S. and its adversary, the Obama administration needs to consider this situation with creative diplomacy. The common cause of energy and the clarity of trade flows can help to literally bridge the divide in this regard and make Iranians and Pakistanis more confident of U.S. sincerity for peace and development in the region.

In this context, the Obama administration might harken back to the previous administration's approach to the matter. During a rare visit to Islamabad in 2006, President George W. Bush remarked that "our beef with Iran is not the pipeline…our beef with Iran is [that] they want to develop a nuclear weapon" and suggested he "understands the need to get natural gas in the region, that's fine." Differentiating between nuclear compliance and regional cooperative projects on energy is essential. The U.S. government has a rare opportunity to deal with its two most intractable problem countries in South Asia — Iran and Pakistan — with one master stroke of pipeline diplomacy.

http://www.huffingtonpost.com/mobileweb/saleem-h-ali/pipeline-diplomacy-with-iran-pakistan_b_1325664.html

Print this Report