A new Hope

[muse]

Bridging the divide: India offers to lay pipeline for oil export to Pakistan
By Zafar Bhutta
Published: May 29, 2012

The two sides will finalise prices of petroleum products and transportation charges today. PHOTO: FILE
ISLAMABAD:

India has offered to build a pipeline from its territory to the Wagah border for export of oil to meet all needs of Pakistan if Delhi is assured purchases in large quantities over the long run, a move that will deprive energy-rich Gulf countries of a lucrative market.

Pakistan believes that it can get oil supplies from neighbouring India at 30% cheaper prices because of low transportation cost, say officials.

A government official told The Express Tribune that Pakistan and India were likely to strike a deal with the signing of a memorandum of understanding on the concluding day of two-day talks on Tuesday relating to import of oil and liquefied natural gas (LNG) from Delhi. “India has told us that it has a surplus capacity of 50 million tons of oil,” he said.

During the first day of technical-level talks between the two countries in Islamabad, the Pakistani team expressed the desire that it could import all petroleum products including high-speed diesel, furnace oil, petrol and jet fuel from India to meet domestic requirements.

In a unique proposal, Pakistan offered export of naphtha – a surplus product – to India, which Delhi would convert into petrol and then re-export it to Pakistan. “India also needs naphtha for its industries,” the official said.

“The two sides will finalise the prices of petroleum products and transportation charges today (Tuesday),” a participant of the meeting said.

Besides laying an oil pipeline to Wagah, “we can also ship oil through sea route to meet the demand of southern parts while tankers may also be used in this regard,” the official quoted the Indian side as saying.

However, Pakistani officials looked not interested in oil supplies through tankers, believing it would prove expensive. However, import of oil through ships was considered cheaper, but the pipeline was described as the cheapest option.

Pakistan consumes 6.9 million tons of diesel per year, of which domestic oil refineries produce 3.2 to 3.4 million tons and the rest is imported.

Furnace oil demand stands at about nine million tons, of which domestic refineries produce about 2.5 million tons and the remaining is imported. The country is working on some new power plants, which will increase demand of furnace oil in coming years.

Pakistani and Indian officials would also discuss import of 200 million cubic feet of liquefied natural gas (LNG) per day from Delhi, which would be able to swiftly start deliveries.

Pakistani authorities believe that import of LNG from Qatar and other countries like Malaysia would take three years, while India may start supply in six to eight months, the official said, adding the import plan would be finalised during the two-day talks.

The Indian delegation was headed by P Kalyanasundaram, Director (International Cooperation and Corporate Affairs), Ministry of Petroleum and Natural Gas and comprised representatives of leading Indian companies.

The Pakistani team was headed by Shabbir Ahmed, Joint Secretary (International and Joint Ventures), Ministry of Petroleum and Natural Resources, representatives of ministries of commerce, foreign affairs, finance and others.

Earlier Petroleum Secretary Muhammad Ejaz Chaudhry said this dialogue would provide an opportunity for Indian businessmen to explore potential areas of trade with Pakistan.

In a statement issued by the Ministry of Petroleum and Natural Resources, Petroleum Minister Dr Asim Hussain said there was potential for trade in petroleum products between India and Pakistan. “Pakistan is interested in importing furnace oil and diesel,” he said while talking to the visiting Indian delegation.

 

[muse]

India struggles with pipeline geopolitics
By Zorawar Daulet Singh

NEW DELHI - India spends more than U$400 million each day on oil imports which account for 70% of its oil consumption. For a country facing such high dependence on outside sources so early in its growth trajectory one would expect securing reliable and long-term supplies would be at the forefront of the development and foreign policy agenda.

And yet, Delhi seems to be expending diplomatic and political resources in a direction that would baffle even the most optimistic observer. Last week, the union cabinet affirmed India's participation in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) 1,700-kilometer pipeline, which envisages a flow of gas from Central Asia into the Indian heartland.

While Afghanistan and Pakistan committed to the security of the pipeline in a December 2010 Inter-Governmental Agreement, the transit zone involved in the TAPI case is now widely acknowledged as the most tumultuous region in the world.

In Afghanistan, though the Kabul regime has received extensive international aid and military support, it is by no means assured that the state will acquire a wherewithal that can ensure the uninterrupted flow of a strategic resource like natural gas across 735 kilometers of southern and western Afghanistan, the hotbed of Pashtun resistance.

In Pakistan, the problem is magnified because the state's capacity is weak and compromised by an ideology that is repulsed by the idea of any interdependence with India. Further, the military - the most vital state organ for underwriting the security of the 800-kilometer transit route - is nurtured by a strategic culture that strives to acquire new leverages vis-a-vis India. To place India's energy security in the hands of an institution that has rarely been bound by international agreements would be strategically irresponsible.

So, why is this project being pursued? Perhaps, it serves to underscore India's hope for a seamless flow of resources across the greater South Asia region. It might also be good public diplomacy as India exudes the right notes for a region condemned to irresolvable territorial conflicts.

Indeed, the US State Department spokesperson summed up US interest in this project, "You've got new transit routes, you've got people-to-people links, you've got increased trade across a region that historically has not been well-linked, where there have been historic antipathies which are now being broken down by this positive investment project."

Few can dismiss such grandiose rhetoric. But to assert that the TAPI pipeline "is a perfect example of energy diversification" as the US official did, is going too far. What it actually reflects is America's dual strategy to break the Russian monopsony on Central Asian gas and prevent the flow of Iranian gas eastward. Concern for South Asian energy security was probably an afterthought.

The pursuit of energy security is a serious endeavor and cannot be driven by or become hostage to ideological or optimistic projections of international politics. Surely, there are other more benign means to test the prospects of Central-South Asian camaraderie? A two-way flow of less strategic merchandise and people could be a start.

If energy security is a national concern, Delhi should be pursuing a geostrategy that is based on a more sensible comparative assessment of the potential lines of communication to the energy starved Indian heartland.

The severing of India's natural lines of communication to the resource wealth of Central and West Asia was one of the great tragedies of partition. In many ways, India's post-1947 foreign policy has struggled to overcome the geopolitical consequences of 1947 after which India became a prisoner of geography unable to forge continental geoeconomic or geopolitical links with its western periphery and beyond.

Fortunately, peninsular India has historically always provided options to craft maritime lines of communication between India and the world. Indeed, over 90 percent of India's trade and all of its oil imports rely on maritime transportation networks. Thus, it is only logical for India to explore maritime energy routes.

In 2009, Gas Authority of India (GAIL) entered into a Principles of Cooperation agreement with South Asia Gas Enterprises (SAGE) to explore the technical viability of laying a deep-sea pipeline from West Asia across the Arabian Sea to India. According to SAGE, the cost of a pipeline from Oman to India, a project first studied in 1995, would be $4 billion (TAPI is estimated at $8-10 billion).

The gas tariff would also be lower since transit or security costs become negligible. Oman's access to the Arabian Sea makes it a natural export hub for gas-rich states like Qatar, Turkmenistan and Iran. A direct coastal pipeline from Iran to India is not only technically challenging given the depth and turbulence of the Indus Canyon, but would also require Pakistan's acquiescence since it would traverse near the latter's exclusive economic zone.

In March 2011, the union petroleum minister stated in the Rajya Sabha (Upper House), "So far technical feasibility of the [Oman-India] project has not been established" and "not much progress has been made since" mid-2009. Has India's inability to de-hyphenate its Tehran ties from its US-policy reduced the attractiveness of this project?

Russia's strategy of systematically investing in routes that bypass politically volatile or unfriendly transit states can serve as a lesson for India. In 2005, Moscow and Berlin came together to collaborate on a project that sought to overcome the financial and geopolitical costs of transiting large volumes of natural gas through Central and Eastern Europe.

Until recently, 70% of Russian gas was transiting through Ukraine and Poland. The 1,200-kilometer Nord Stream sub-sea pipeline network, which became operational in 2011, has directly connected Eurasia's largest energy supplier to the economic heart of Europe through the Baltic Sea.

India's proximity to energy rich West Asia is a geopolitical advantage that most nations can only aspire for. Lines of communication, however, do not just arise spontaneously but are always the outcome of sustained political, economic and even military commitment to specific routes that are deemed stable and relatively inexpensive to sustain. This is the essence of geostrategy.

Moreover, advancement in offshore technologies and high hydrocarbon prices has made deepwater pipelines a viable proposition. Finally, the growing capabilities of the Indian navy will only complement a political initiative to pursue a sub-sea link between West Asia and India's west coast.

It would be absurd if public diplomacy that is apparently guiding Delhi's calculus on TAPI deflects attention from the more urgent need for a secure maritime energy line of communication to India's economy. A subsea pipeline deserves more than a perfunctory assessment.

Zorawar Daulet Singh is Research Fellow at the Center for Policy Alternatives, New Delhi (Centre for Policy Alternatives)

 

[Hello_10]

Bridging the divide: India offers to lay pipeline for oil export to Pakistan
By Zafar Bhutta
Published: May 29, 2012

India has offered to build a pipeline from its territory to the Wagah border for export of oil to meet all needs of Pakistan if Delhi is assured purchases in large quantities over the long run, a move that will deprive energy-rich Gulf countries of a lucrative market.

Pakistan believes that it can get oil supplies from neighbouring India at 30% cheaper prices because of low transportation cost, say officials.

will it make that difference in the oil price in Pakistan? I guess petrol/diesel prices in Pakistan would be close to Rs100 per litre and recently government increased petrol price by Rs10? and this way, by importing the same oil from India, they may reduce its price upto Rs25 to Rs30/litre?

are the numbers are correct or the government of pakistan is really that fool for not going for this deal a long time before? 30% saving on oil import means at least $3bn saving on pakistan's total oil import bill, while US offered hardly $2.4bil aid to pakistan this year and have cut $33mil due to Afridi case also? is it that embarrassing if Pakistan import oil from India as compare to receiving aid from US?

 

[Jango]

Wouldn't it be easier to import crude oil from Iran, and refine it locally, considering that the local refineries are running at very low capacity?