Friday April 19, 2024

Can Iran gas pipeline light the way for Pakistan?

Stretching 1,100 kilometers from Iran's gas fields to Pakistan, IP pipeline offers a tempting solution

By Jan Achakzai
April 01, 2024
Workers can be seen busy working on a gas pipeline at Chah Bahar, Iran. — AFP/File
Workers can be seen busy working on a gas pipeline at Chah Bahar, Iran. — AFP/File

For years, Pakistanis have grappled with power outages that disrupt their daily lives and cripple businesses. The economic engine sputters, and growth stagnates. In this frustrating scenario, the proposed Iran-Pakistan (IP) gas pipeline emerges as a beacon of hope, promising reliable and affordable energy. But a major hurdle stands in the way: US sanctions on Iran.

While Pakistan should explore alternative energy sources, it also needs to fight for a waiver to build the IP pipeline. A resolve shown by Pakistan's Petroleum Minister, Musadik Malik, when he announced that the government would seek an exemption from US sanctions to proceed with the long-delayed Pakistan-Iran gas pipeline project.

Stretching 1,100 kilometers from Iran's gas fields to Pakistan, the IP pipeline offers a tempting solution. The government seeks to extend the pipeline along Balochistan’s coastal belt linking with Gwadar Port City. The estimates suggest Pakistan could save a whopping $2 billion annually on energy imports. This translates to a much-needed economic boost, potentially lowering energy bills for ordinary citizens. The pipeline would be a reliable, long-term source of energy, freeing Pakistan from the volatile fluctuations of the fuel market.

The US has thrown a wrench into the works by imposing sanctions on Iran, including restrictions on its energy sector. Partnering with Iran in this sector could have severe consequences for Pakistan. A message publicly delivered by many officials in Washington.

A State Department spokesperson, during a recent press briefing, reiterated this stance, reminding all parties involved about the potential for violating US sanctions on Iran through such business ventures.

"We always advise everyone that doing business with Iran runs the risk of encountering our sanctions," the spokesperson cautioned, adding that the State Department's top official for South and Central Asia, Donald Lu, had previously conveyed the same message to a congressional committee.

While US sanctions are a serious concern, waivers are occasionally granted, though they're usually temporary and project-specific. Given the current tensions surrounding Iran's nuclear program, a waiver for the IP pipeline seems unlikely. However, dismissing it entirely might be a mistake. Here's why:

The US has granted waivers to Turkey and India for energy deals with Iran. Pakistan can leverage this to argue for similar treatment, especially considering the dire state of its energy sector.

By pursuing the IP pipeline negotiations, Pakistan can potentially use the threat of US sanctions to its advantage. Publicly pushing for the IP pipeline could incentivize the US to offer financial or technical assistance towards a sanctions-free alternative, like the Qatar pipeline.

Pakistan can't put all its eggs in one basket. So it needs additional options to consider. For example:

An undersea pipeline from Qatar, a US ally with vast gas reserves, could provide a reliable and sanction-free source of natural gas.

Investing in Liquefied Natural Gas (LNG) terminals would allow Pakistan to import gas from various sources, diversifying its energy mix and reducing dependence on any single supplier.

Pakistan has abundant potential for solar and wind power. Investing in these resources could offer long-term energy security and environmental benefits. One example is Balochistan which has 100,000 MW wind/solar potential.

Out of the world's 10 sites, four wind places are in Balochistan i.e. Noshki, Khuzdar, LakPass near Quetta. Pakistan can substantially reduce bills for consumers if it can develop this wind power.

The private sector is very much interested despite the challenges of infrastructure development and grid integration. With a total cost of Rs 30 billion rupees, it offers an easy solution. But Balochistan’s bureaucracy and government have an absorption capacity issue to handle mega projects. However, SIFC can pursue this project and can make Pakistan a wind power through Balochistan.

Measures to improve energy efficiency across sectors can significantly reduce overall energy demand, offering some immediate relief.

While exploring alternatives like the Qatar pipeline, Pakistan can utilize the IP pipeline strategically: Openly pursuing the IP pipeline could encourage the US to offer alternative solutions or concessions, creating a win-win scenario.

Throughout negotiations, Pakistan needs to maintain a strong relationship with the US to avoid jeopardizing its vital strategic and economic partnership.

Pakistan's path to energy security requires long-term planning, decisive action, and a willingness to explore innovative solutions. By prioritizing a diverse energy mix, strategic diplomacy, and a multi-pronged approach, Pakistan can break free from dependence on high-risk, potentially sanction-laden projects and illuminate a brighter energy future for its citizens.

The author is a geo-political analyst and former Information Minister of Balochistan. He tweets @Jan_Achakzai