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Iran seeks to salvage gas pipeline deal

Jan. 31, 2013 at 4:15 PM   |   Comments

DUBAI, United Arab Emirates, Jan. 31 (UPI) -- Iran is still plugging away at building a natural gas pipeline to energy-hungry Pakistan, a project that's been plagued by difficulties since it was first mooted nearly two decades ago.

The problems include determined U.S. efforts to halt the project as part of Washington's drive to isolate the Islamic Republic, successfully forcing India out of the project in 2009, and Pakistan's perennial lack of funds.

Now Iran's offering Islamabad a $500 million loan to finance its segment of the planned $1.5 billion pipeline that Pakistan desperately needs to provide energy for power generation.

But U.S. pressure on Islamabad is intense, over and above the strains caused by deadly U.S. drone attacks against al-Qaida and its Islamist allies in Pakistan's tribal areas that have killed many civilians.

Even so, the Iranians expect Pakistan to move ahead with the project, out of economic necessity -- and a growing antipathy toward Washington.

"It's a feasible project for Pakistan," said Asim Hussain, chief adviser on oil and natural resources to Prime Minister Asif Ali Zardari.

"It's the quickest route, the cheapest route, where we can fulfill our energy needs."

Pakistan signed an agreement on the proposed 1,200-mile pipeline with Iran in May 2009, after 14 years of on-off negotiations.

Under the deal between the National Iranian Oil Co. and Pakistan's Interstate Gas System, Tehran is to provide 750 million cubic feet of natural gas per day for 25 years from its giant offshore South Pars field in the Persian Gulf.

Most of that's intended for Pakistan's power-short industrial north.

Final negotiations between Tehran and Islamabad were reaching a critical stage in December, when Zardari unexpectedly called off a planned visit to Tehran to seal the deal.

This was seen as the result of U.S. pressure and has added a new layer of complexity on U.S.-Pakistani relations already under severe strain.

The Americans, hoping to intensify economic pressure on Iran from U.S. and EU sanctions over Tehran's nuclear program, are pushing an alternative gas route from the former Soviet republic of Turkmenistan in Central Asia.

Meantime, the Iranians made a new pitch to India this month to reverse its decision to quit the original Iran-Pakistan-India pipeline project. It's not expected to succeed.

New Delhi cited security concerns in 2009, primarily because the pipeline will run through the violence-torn Balochistan region that straddles the Iran-Pakistan border.

But it was clear that Washington had put the squeeze on the Indians and persuaded them to quit the project by offering to help New Delhi expand its nuclear energy program.

India has a point though. Some analysts see Balochistan becoming a key factor in both pipeline projects since they would have to run through the unruly region.

Iran's southwestern Sistan-Balochistan province is in turmoil with Sunni Muslim rebels of the Jundullah nationalist movement fighting the Shiite-dominated central government in Tehran.

Pakistan's long-neglected Baloch region is also plagued by tribal unrest.

The NIGC said this month it plans to start construction on the Iran-Pakistan pipeline shortly.

If that happens, "Balochistan will become a key energy flashpoint in 2013," the global energy website OilPrice.com observed.

Energy analysts say that while India may hold off returning to the Iranian pipeline project, Pakistan, gripped by worsening economic crisis, will defy the Americans in the end.

"The U.S. and Saudi Arabia have fought tooth and nail to get Pakistan to give up on pipeline project with Iran," OilPrice.com noted. "But this is a losing battle.

"Pakistan is starved for cheap energy and its public would never accept U.S. interference in this project."

Even so, Pakistan and Iran are highly vulnerable because of the militant Balochi groups operating along the border. Some 400 miles of the pipeline will run through the lawless tribal region.

"In Balochistan, the U.S. and Saudi Arabia are funding Sunni jihadists -- Jundullah -- to destabilize the region, and in the process, dangerously, Pakistan," OilPrice.com cautioned.

"This extends to Iran's Baloch province. We can expect some significant sabotage of this pipeline, which will be blamed on Sunni militants."

This, in turn, could result in joint Iranian-Pakistani offensives against the Baloch tribes. But either way, it looks like there will be blood.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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