The Hindu Business Line : Promise in the pipeline

THE FOUR-DAY VISIT of the Petroleum Minister, Mr Mani Shankar Aiyar, to Pakistan has raised visions of Indo-Pak energy cooperation soon becoming a reality. The setting up of a Joint Working Group on Energy Cooperation, according "top priority" to transnational pipeline projects as recorded in the joint statement issued at the end of the visit, and Pakistan's promise to revisit the ban on diesel imports from India are all positive developments of Mr Aiyar's visit. These are encouraging first steps towards a broader and mutually beneficial partnership in the energy sector. Pakistan is strategically positioned in terms of oil geography and India, with its rising energy demand, cannot but acknowledge this fact as it sets out to tap natural gas from Iran and Central Asia and transport it through pipelines into the country.

For Pakistan, this is a great opportunity to capitalise on its strategic position between the regions holding a major part of the world's gas reserves — West and Central Asia — and India, and earn handsome fees for granting transit rights for pipelines through its territory. Further, it can address its own growing energy needs by tapping gas from these pipelines. The current moves on energy cooperation are a pragmatic acknowledgment of this reality by the two countries. Pakistan also stands to benefit if it lifts the ban on import of diesel and other petroleum products from India. Obviously, Panipat and Jamnagar, where India has large refineries, are closer to Lahore and Karachi than the Gulf. Here again, there is a marriage of interests as Pakistan will gain from lower transport charges for its imports and India, with its current excess refining capacity, can find a market next door for petroleum products.

The immediate focus of Mr Aiyar's visit was, of course, the Iran-Pakistan-India gas pipeline. Though both countries may deny it, the long shadow of Uncle Sam looms over the pipeline and this could well prevent it from becoming a reality. It is interesting to note that the joint statement talks of "transnational gas pipelines" without mentioning specifically the Iran-India pipeline. This coupled with the higher interest now of Pakistan in the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline appears to indicate that the US pressure is getting the better of the Iran project. India and Pakistan need to stand their ground and not cowed down by such pressures because the Iran pipeline suits their economic interests perfectly.

There is a lot of ground to be covered especially on such details as the pricing of the gas by Iran, the calorific value of the gas that is on offer, the transit fees payable to Pakistan and, of course, the safety of the pipeline. These details could be discussed in the next few months. Meanwhile, other projects such as the TAP pipeline, where Mr Aiyar has succeeded in getting India invited to the next month's discussions, should also be pursued for what they are worth. With its burgeoning appetite for fuel, the country needs to pursue multiple options to ensure its energy security.

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