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Home Archive March 2011 Issue Issue Content Politicking Over Central Asia’s Pipelines

Politicking Over Central Asia’s Pipelines

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Turkmenistan, Afghanistan, Pakistan and India signed on December 11, 2010 two agreements (an Intergovernmental Agreement and Gas Pipeline Transmission Agreement) for constructing the Turkmenistan, Afghanistan, Pakistan and India Gas Pipeline (TAPI). However, the ongoing civil wars in Afghanistan and in the northern part of Pakistan through which the TAPI will have to pass have created a major security obstacle to its construction and its normal operation if and when it is built. Given all the indicators that suggest the continuity and expansion of these armed conflicts into the foreseeable future, the TAPI will unlikely become a reality by 2014 as envisaged by signatories. This reality calls into question the significance of the December 2010 agreements.
 
Map: TAPI and IPI Pipelines
 

Source: EIA

The December agreements seem to be more political in nature, intended to secure certain objectives more than anything else. They include dissuading India once and forever from importing gas from Iran through the proposed Iran-Pakistan-India Gas Pipeline (IPI), now turned into the Iran-Pakistan Gas Pipeline (IP) after India’s 2009 withdrawal from the project (the wisdom of which is still questioned by many Indians). Discouraging Pakistan from implementing the IP pipeline would remove the possibility of China’s importing gas from Iran through this infrastructure. As is well known, China has invested heavily in Iranian upstream projects. Canceling the IP would also exclude Iran as a transit route for Turkmen gas exports. In essence, the December agreements were meant to slow down Iran’s rise as a regional power with a higher status by limiting its energy exports, the major source of foreign currency for its government. 
 
History
 
As an envisaged pipeline project for exporting Turkmen gas to India via Afghanistan and Pakistan, the TAPI has been floating around since the early 1990s when the Soviet Union’s fall and Turkmenistan’s independence paved the way for its future realization. However, its main stakeholder (UNOCAL) shelved the project in 1998 when the Taliban’s major offensive to control the Afghan territory bordering Turkmenistan (then under the anti-Taliban Northern Alliance) failed. This failure and the continued Afghan civil war turned the TAPI into a pipe dream with no chance of realization in the foreseeable future.
 
The Taliban’s fall in November 2001 created the hope for an end to Afghanistan’s instability and thus helped revive the project, leading to the conclusion of an agreement for its construction in December 2002 by Turkmenistan, Afghanistan and Pakistan. Nevertheless, despite the backing of the Asian Development Bank (ADB), the project has remained a pipe dream in the absence of the single major prerequisite for its realization: security. Contrary to initial hopes, the Taliban's fall did not end the civil war in Afghanistan; it only changed its protagonists. The Taliban and like-minded extremist armed groups (Hezbi Islami) allied with Al Qaida have since challenged the power and authority of the Afghan government and its supporters, the US and the members of the International Security Assistance Force, in a bloody war which has denied peace and stability to a large and growing part of Afghanistan. For all practical purposes, the Afghan government and its foreign allies have lost control of Pashtun-dominated eastern and southern Afghanistan to the Taliban and its allies, which control these regions in one form or another. With a high degree of success, these destructive groups have sought to expand their power to other parts of the country or to destabilize them through numerous violent acts. Consequently, many other parts of the country, with the partial exception of the three Tajik-dominated Afghan provinces bordering Iran, have become the scene of fierce armed conflicts.
 
To have a clear understanding of the TAPI’s transit route to India, add to the above the deteriorating security situation in Pakistan’s territories that neighbor Afghanistan, namely Baluchistan Province and North West Frontier Province (NWFP). In particular, the NWFP has been the scene of an expanding war between the Pakistani security forces and the Pakistani tribal forces supporting the Taliban. The Pakistani government has unsuccessfully sought since 2009 to extend its control over the area, while the Taliban and its tribal support have expanded their operations to parts of Baluchistan Province through which the TAPI would have to pass. Given this extensive and growing insecurity, the TAPI was practically shelved after the 2002 agreement’s conclusion only to re-emerge in December 2010.
 
Factors challenging the realization of the TAPI
 
Despite efforts on the part of the Afghan government and the NATO-led forces, there are no grounds to expect an end to the ongoing Afghan civil war in the foreseeable future. On the contrary, evidence suggests its expansion and thus a worsening of the security situation. Continued rampant poverty, extensive unemployment and low income have resulted in the failure of the Afghan government and its supporters failure to revitalize the Afghan economy. The latter is overshadowed by the informal economy dominated by the production and trafficking of narcotics (mainly opium and its derivatives such as heroin) and associated illegal activities. Against the background of poor infrastructure, the absence of a vibrant and robust economy, the extensive documented human rights abuses by the Afghan government and its rampant corruption have helped delegitimize the Afghan government and lend legitimacy to its armed opponents. Many operational mistakes by the NATO-led forces, leading to the destruction of property and the loss of life for many non-combatant Afghans, have further delegitimized the Afghan government. Under such circumstances, the Taliban and its allies have found a suitable ground for recruitment from among many disillusioned and poverty-ridden Afghans. In the absence of any evidence to expect a major change for the better in Afghanistan, the end of the current civil war and insecurity is simply inconceivable in the predictable future and is therefore a major challenge for constructing the TAPI.

Additionally, there are serious doubts about the availability of enough gas to feed the TAPI, as Turkmenistan seems to have over-committed itself to various gas export projects. Apart from its gas exports via Russia and supplying gas to Kazakhstan, it is now committed to export annually 30 billion cubic metres (bcm) of gas to China via the Central Asian Gas Pipeline, whose first phase went online in December 2009. As well, the inauguration of the second Turkmen-Iranian gas pipeline (Dolatabad-Sarakhs-Khangiran) in January 2010 provided for increasing its gas exports to Iran from 8 bcm to 20 bcm, to be realized when the second pipeline reaches it maximum capacity. Iran imports gas because, despite having the world’s second largest gas reserves, Iran’s gas consumption (the third largest in the world) outpaces its production (the fourth largest producer in the world) (2008 figure). Finally, Turkmenistan has committed itself to large gas exports to the EU through the proposed Nabucco pipeline. Given Turkmenistan’s large export obligations, it is doubtful whether it can possibly supply the other three TAPI countries even if all its gas field development plans (ongoing and envisaged) are fully realized, itself a doubtful scenario in the near future. It is within this context that the December 2010 agreements should be analyzed. 

Four-sided agreement of December 11, 2010

 
Last December the Afghan (Hamid Karzai), Turkmen (Kurbanguly Berdymukhamedov) and Pakistani (Asif Ali Zardari) presidents and India's energy minister (Murli Deora) signed the framework Intergovernmental Agreement and the Gas Pipeline Transmission Agreement in Ashgabat, Turkmenistan’s capital. The agreements provide for constructing the TAPI to supply Afghanistan, Pakistan and India with 33 bcm of Turkmen gas annually. The pipeline’s construction is planned to start in 2012 and to be completed in 2014. The actual cost is unknown—estimates range between $3.5 and $10 billion. Starting from Turkmenistan’s Dauletabad gas field, the proposed route for the pipeline (about 1060 miles) provides for its passing through Herat and Kandahar (Afghanistan), Quetta (capital of Pakistan’s Baluchistan Province) and Multan (Pakistan) to connect to the Fazilka region (India) on the Indian-Pakistani border.

As reported, the agreements do not deal with security and funding issues. Nevertheless, the Asian Development Bank (ADB) is known to have undertaken its financing, which is by no means a guarantee. Funding for constructing the TAPI can only begin when the pipeline’s route is secured. This is the December agreements’ major weakness, acknowledged by all concerned parties including the Afghan government. The day after the signing ceremony, Wahidullah Shahrani, Afghanistan’s Minister of Mines and Industries, announced his government’s plan to deploy up to 7,000 troops to secure the pipeline. Revealing the recognition of the security challenge facing the pipeline’s construction and its normal operation, the announcement cannot possibly be equated to settling the security problem for a number of reasons. Chief among them is the Afghan military’s numerous weaknesses arising from various factors. Despite about a decade of training, the Afghan military has proven to be no match for the Taliban and its allies, leaving the army incapable of carrying out its major missions without the NATO-led military forces’ support. 
 
Another observation has been the difficulty of protecting pipelines, the white-elephants of the infrastructure world, through conflict-affected regions. The well-known examples include the Turkish military’s failure to end frequent attacks by the Kurdish separatist armed group (PKK) on a section of the Baku-Tbilisi-Ceyhan Oil Pipeline (BTC) passing through southern Turkey, resulting in numerous closures of the pipeline since its launch in 2006. It is noteworthy that Turkey’s military enjoys NATO status as the Alliance’s second largest military force. To the south of Turkey, the US-led coalition forces and the Iraqi military, in what is a far better military-preparedness situation than their Afghan counterpart, have also failed to end attacks on the Iraqi oil and gas pipelines—a constant target of the Iraqi insurgent groups. Therefore, it is a sound assertion that the Afghan military’s record, even if it is fully supported by the NATO-led forces, will not be any better than its Turkish, Iraqi and American counterparts.

The BTC pipeline, which passes through Azerbaijan, Georgia and Turkey—each having security problems of their own—evinces that pipelines can be built even in territories under the worst security situations. For this reason, the TAPI can be built at a high cost, both in financial terms and in terms measured by the potential loss of human life, if its proponents are prepared to pay these costs. This example also demonstrates that a pipeline can be kept operational, albeit at unjustifiable costs as measured by the loss of human life, debilitation or destruction of physical infrastructure, or even environmental damage and destruction, if the owner/operators are willing to burden these costs. Hence, the TAPI, which will surely become a major target for the Taliban and its allies, could be kept operational to some extent depending on the repair of damage to it following each attack. However, given the worsening security situation in Afghanistan, the TAPI’s realization and operation will be a herculean task surely unachievable without the direct involvement of the NATO-led forces, although even then a better result than that of the Iraqi case cannot be guaranteed. In fact, the reluctance of the NATO countries to significantly expand their presence in Afghanistan and their efforts to decrease their direct engagement in combat missions suggest that the TAPI’s realization and operation will be far more challenging than those of BTC.

Given the TAPI’s presumed high price tag and the predictable uncertainty about its uninterrupted operation once constructed, one wonders why the TAPI is being promoted when an alternative project lacking such security challenges exists (e.g., through Iran). If recent history is any indication, political considerations must be the underlining justification for TAPI construction.

It becomes clear that certain political objectives were behind the December 2010 pipeline agreements. One clear objective is eliminating the possibility of India’s importing gas from Iran through the proposed IPI. After years of negotiations, India withdrew from the project in 2009 for two main reasons. One was from American pressure, as the US government subjected India’s purchase of American nuclear reactors to its opting out of the IPI as part of US policy to weaken the Iranian economy through limiting its oil and gas exports. Another was India’s confidence that it could increase its domestic production to reduce its short-term dependency on imported gas. It would do so by developing its newly discovered offshore gas fields, especially those in the Bay of Bengal, which pushed its reserves up from 0.60 trillion cubic meters (tcm) in 1998 to 1.09 tcm in 2008. However, many Indians now have second thoughts about the wisdom of their withdrawal from the IPI pipeline given India’s long-term need for large gas imports (piped and LNG) and the undeniable importance of Iran as a long-term regional supplier to India. India’s large investment in the Iranian gas industry (e.g., South Pars) despite American objections reflects this reality.

Another objective of the December 2010 pipeline agreements is to discourage Pakistan from implementing the Pakistani section of the IP pipeline, although for the most part Iran’s section is now operational. Of the approximately 1312 mile pipeline, the Iranian share is approximately 690 miles, of which approximately 570 miles was completed by June 2010. Presently under construction, the remainder is scheduled for completion over the next two years, after which it will be connected to the Pakistani section in 2014. Pakistan needs imported gas for power generation other purposes, as its domestic reserves are no longer sufficient to meet its domestic gas requirements (about 50% of its energy mix). Its only gas-exporting neighbor, Iran, is a natural supplier. Nonetheless, for the same reason mentioned for India, Washington has sought to discourage Islamabad from implementing its section of the pipeline by offering Pakistan financial assistance to build an LNG re-gasification terminal in order to import LNG from suppliers such as Qatar instead of importing directly piped gas from Iran. Moreover, Washington has offered to help Islamabad import electricity from Tajikistan via Afghanistan, a seemingly impossible mission at least in the foreseeable future given the expanding insecurity in Afghanistan and the fact that Tajikistan is suffering from electricity shortages itself. Ironically, Iran is now providing financial and technical assistance to the Tajik government to address this deficiency by expanding its hydropower sector. It is in this context that importing gas from Turkmenistan via the TAPI is meant to end Pakistan’s plan to import gas from Iran.

Yet another objective of the December 2010 pipeline agreements is to remove the possibility of Iranian piped gas exports to China. China has invested over $25 billion since the last decade in various Iranian oil and gas field development projects (e.g., onshore Azadegan and Yadavaran and offshore South Pars) with a clear intention of increasing its oil and gas (LNG initially and eventually piped gas) imports from Iran. Iran is considered a friendly long-term oil/gas exporter by China, and it shares some of China’s grievances about the structure of the international system. On many occasions, China has expressed its clear interest in importing Iranian gas through the IP once it is operational, which is completely feasible given China’s bordering Pakistan. Indeed Pakistan has its own interests in generating transit fees in order to decrease the cost of its gas imports from Iran. By encouraging Pakistan to opt out of the IP pipeline, the December agreements seek to remove this possibility while both the US and the EU are jointly trying to limit Iran’s energy exports for economic and political reasons. Denying China, a rising superpower, a stronger role in the Iranian oil and gas sectors is a side benefit of the December agreements.

Finally, another clear objective of the December 2010 agreements is to seal Iran’s exclusion of Turkmenistan’s gas exports as a transit route, thus shelving forever the 1990s’ plan for constructing the Turkmenistan-Iran pipeline, promoted by Iran and ConocoPhillips. As a neighboring country, Iran is a logical transit route for Turkmen piped gas exports to Turkey, Europe (via Turkey), and the Indian subcontinent, and also for Turkmen LNG exports to the Asia-Pacific region via its Oman Sea ports. This is so for at least two reasons. Iran offers the shortest and the least technically challenging, and thus the least expensive, route given the absence of complicating geological features such as mountains. Yet, political considerations have prevented the realization of this project despite the original interests of an American company (ConocoPhillips) in the project.

Conclusion

 
Any pipeline project can be undertaken even under the worst case scenario, provided that the owner and operators are willing to pay the price. Under normal circumstances, when economic objectives are the major driving force, a difficult and dangerous pipeline would be shelved. The TAPI would have no chance of realization. However, if political incentives are the main drivers, and, again, if the operators of such a project are willing to pay the price whatever it may be, the TAPI could well become a reality as exemplified by BTC’s construction. 
 
In conclusion, the main incentive for constructing the TAPI seems to be geared towards realizing certain political objectives: slowing down Iran’s rise as a regional power through weakening it politically and economically by denying it gas exports to the Indian subcontinent and China, and by excluding it from Turkmen gas exports. However, certain factors remain obstacles to TAPI construction and its projected future operation. The first and foremost obstacle is insecurity in Afghanistan and across the northern part of Pakistan, through which the TAPI will have to pass on its way to India. All indicators suggest a worsening security situation there and an inability of the respective governments and the NATO-led forces to contain and eventually to end armed conflicts. Secondly, there is no doubt that anti-government (Afghan) armed groups operating in these countries will target the TAPI pipeline if construction begins in 2012. These attacks will prolong the construction process and push the financial and human-related costs of its realization. The Afghan government’s offer to deploy up to 7,000 troops (even with direct military support of NATO-led forces) could not possibly deter attacks, as evident in the expansion of the destructive and violent activities of the Taliban and its allies. Nor will the utilization of “private security contractors” significantly improve the security situation in Afghanistan, as experienced in Iraq. There are additional and serious doubts about Turkmen gas availability to feed the TAPI due to that country’s over-commitment to various other export projects.

The TAPI, if realized, may contribute to regional tensions and will negatively affect Iran. As a gas exporter, Iran seeks to increase its share of the global gas market, as its current share is insignificant relative to its vast reserves. Tensions in Iran’s ties with Afghanistan and Pakistan will also have a negative impact on the region’s security situation, which requires Iran’s cooperation. The saga, as is often the case, is likely to continue. Stay tuned.
 
Dr. Hooman Peimani is Head of Energy Security & Geopolitics in the Energy Studies Institute based at the National University of Singapore. He is a member of the International Editorial Advisory Board of the Journal of Energy Security.
 
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