US sanctions on Tehran have for long been touted as the primary reason behind IP pipeline always being a nonstarter. However, once the sanctions were relatively eased out there was an opening for Islamabad on the IP pipeline front. Saudi Crown Prince Salman bin Abdulaziz Al-Saud’s visit to Pakistan last month seems to have changed that as Petroleum and Natural Resources Minister Shahid Khaqan Abbasi told the National Assembly that the pipeline was “off the table”, citing “international sanctions.”
Gas troubles
Pakistan’s energy crisis is well documented and manifests itself through power and gas outages throughout the country. Pakistan’s current shortfall is 2 billion cubic feet per day (bcfd), compared to a supply of 4 bcfd, with only 30 percent of the population believed to be using gas. Meanwhile, the $7.5 billion IP pipeline project would bring 0.750 bcfd gas, singlehandedly bridging 37.5 percent of the demand-supply gap. And with Iran having already constructed the 900-km section of its side of the pipeline, Pakistan is yet to kick off work on its 780-km section, owing to a lack of funding and more tangibly, a lack of intent.
Riyal-politics
Shahid Khaqan Abbasi might have peddled “international sanctions” as the ostensible reason for ignoring IP, but the fact that the announcement came immediately after the Saudi Crown Prince’s visit to Pakistan, obviously means that dumping IP pipeline – and creating a rupture in Islamabad-Tehran ties – is a part of the ‘riyal-politics’ that Riyadh seems to be orchestrating in the Middle East and South Asia. Shahab Jafry, whose recent article ‘Saudi’s new riyal-politics’ published in Pakistan Today touched on how Saudi riyals seem to be superseding US dollars as far as influencing Islamabad’s foreign policy is concerned, says the noise generated by Islamabad recently is a direct corollary of Riyadh’s policy in Syria.
[quote]Riyadh will flush Pakistan with defence contracts and petrodollars in return for military, missile, and perhaps nuclear technology[/quote]
“The US thaw with Iran should have opened a chance for Iran-Pakistan pipeline here, but unfortunately it is just this window that has ruled it out altogether. US-Iran diplomacy has coincided with increasing Washington-Riyadh strains, especially over Saudi patronage of al Qaeda militants in Syria, Libya, etc. And these developments have pushed Saudi to seek a more active defence role from Pakistan, including safeguarding the monarchy – which the American military had done for decades,” Jafry said.
If Pakistan toes the Saudi line in Syria, which the Foreign Office has been publically denying of late, it clearly would be the curtain call on any chance of Tehran and Islamabad bonding on the international stage.
Unusual fallout
A U-turn on the IP pipeline would herald a U-turn on the previous PPP-led government’s policy towards Tehran. With power and gas import spearheading Pakistan-Tehran trade for Islamabad, the two countries were cooperating on multiple fronts. However, regime changes on both sides of the borders seem to be causing unusual fallout between the two.
A relatively moderate – and hence more accommodating for the US – Hassan Rouhani, and a clearly pro-Saudi – owing to Riyadh’s support when he was in exile – Nawaz Sharif seem to be collectively carving out this cleavage between the two nations, even though no direct cause for animosity exists. For Pakistan, already flanked by archenemy India and the volatile Afghanistan, adding Iran to its growing list of antagonistic neighbours, would make little sense.
[quote]With the influx of Saudi petrodollars, the deal with Qatar might end up being significantly more affordable[/quote]
“According to details being worked out, Riyadh will flush Pakistan with defence contracts and petrodollars, in return for military, missile, and perhaps nuclear technology. Of course that will imply that no business with Iran, Saudi’s arch rival in the Middle East, leading to an unusual fallout between Pakistan and Iran. This has serious implications for Pakistan – offending a neighbor with a long border at the expense of a regressive regime responsible for Islamist militancy in Pakistan and the Middle East,” Jafry said.
By letting riyals block out the IP pipeline and ties with Iran, Pakistan has clearly accepted its status as the seemingly perpetual warzone for the Saudi proxy war.
The energy question
While Pakistan looks set to become a Saudi pawn in Syria, as Middle East reshuffles its chessboard, the energy question remains unanswered. The government might have inadvertently divulged its foreign policy in the near future, but what about the 2 bcfd gas shortfall in the country?
Awami National Party (ANP) leader Senator Zahid Khan believes that like most other issues, the government doesn’t seem to have any answers for the energy puzzle either. “The previous government’s deal with Iran regarding the Iran-Pakistan pipeline was a step in the right direction as far as solving the gas problem in Pakistan is concerned. With the Saudis influencing the government’s decision to ignore the project, alternatives need to be put on the table, which the government doesn’t seem to be interested in doing,” Khan said.
While last year’s National Power Policy seemed to focus on renewable energy for power generation, the stratagem to solve gas troubles wasn’t quite elaborated.
“The previous government was closing in on hydropower projects, but the current government seems to be delaying them. The focus on solar and other renewable energy projects doesn’t seem to make sense. The government doesn’t seem to have a clear stance, neither on the power crisis nor the gas shortfall,” the senator said.
As Pakistan distances itself from IP pipeline project, it would have to embrace an alternative sooner rather than later.
Gas solution
For as long as the project has been a bone of contention between US and Pakistan, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline has been dubbed its alternative. However, as the situation in Afghanistan does not seem to be getting better any time soon, any pipeline traversing the volatile northeast of Afghanistan isn’t worth banking on.
This leaves us with Liquefied Natural Gas (LNG) import as the only viable solution. And Economic Coordination Committee (ECC) clearing the tussle between Sui Southern Gas Company (SSGCL) and Engro Terminal Pakistan Limited (ETPL) seems to pointing towards that direction as well. However, Pakistan’s proposed LNG deal with Qatar is said to cost Pakistan $18 per million British thermal units (mBtu), while the gas from Iran would come at $11 per mBtu.
Sunni-dominated Free Syrian Army rebels in the town of Hatita, in the countryside of Damascus
Even so, when one factors in the official – and unofficial – influx of Saudi petrodollars, the deal with Qatar might end up being significantly more affordable.
Saudis buying Pakistan’s interests in the region, and paying for Islamabad’s services in the Middle East, might enable Nawaz Sharif to ease out Pakistan’s gas crisis. And with Qatar, another key player on the Syrian chessboard, combining with Saudi Arabia to provide Pakistan with the impetus to solve the domestic energy crisis, it’s clear that the price tag for Islamabad’s gas solution includes playing out the Saudi written script in Syria.