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April 28, 2008 / Mridul

Iran, Israel, Turkmenistan: India Going Places In Search Of Energy

Trilateral talks for Iran-Pakistan-India gas pipeline have started again and construction work on this project will commence in 2009. India has joined the Turkmenistan-Afghanistan-Pakistan pipeline project construction for which is scheduled to start in 2010. India is also looking to get oil & gas from the Black Sea and Caspian sea through an Israeli pipeline.

All these developments show the desperation of the Indian government which is fighting the skyrocketing inflation. Energy import bill is swelling as the international crude oil prices are touching new high everyday. India with rapidly growing economy is looking for energy wherever it could find it.

Gas from Bangladesh seems a far fetched dream given the sour relations between the two countries because of the continuous infiltration of terrorists into India through the Indo-Bangladesh border. It would be difficult for the Indian government to escape international scrutiny if it overlooks the situation in Myanmar and forges an energy deal – it would be something similar to what China is doing in Sudan. Plus China commands a strategic hold over the region.

The Iran Pipeline Dilemma

The project which was conceptualized by the current IPCC chief, Rajender Pachauri, has been delayed several times due to various reasons. The project would supply natural gas from the South Pars gasfield in Iran on a 50-50 sharing basis between India and Pakistan and would supply 2.06 billion cubic feet of gas per day.

Participation of India in the project is essential for it to be a profitable one. Due to the US pressure India had to put the pipeline on the backburner but Iran threatened to include China if India wasn’t interested. This is the reason given for the resumption of the trilateral talks however India’s Petroleum Minister cites economic reasons for the same. Lack of consensus over the nuclear deal and the rising oil prices added with possibility of losing to China on the energy front, once again, made the government rejoin the trilateral talks.

Pricing of the gas and the transit fees in addition to the security threat from the Baluchistan Liberation Army are some of the tricky issues that the three parties are currently trying to solve. Transit fees increase the gas  price by 42% and given the history of attacks on Pakistan’s pipelines in the region, India is finding it difficult to go by the high price.

The TAPI Solution

India enjoys some leverage over this project. The Asian Development Bank has long been pitching for India’s participation in this pipeline since it is essential for the profitability of the project. Although India can have its way, to some extent, over the pricing of the gas but the threat of sabotage by Taliban is a serious issue one that hasn’t been dealt with yet.

The TAPI pipeline has the backing of the US government which happily presents it as an alternative to the IPI pipeline.  Moreover there is a low possibility of China nudging India out of this project give the friction between the two countries. The issue of contention between the two countries is the the East Turkestan Independence Movement which advocates for the establishment of an independent and self-governing Xinjiang. Currently the area is an autonomous region in China.

Oil Through Israeli Pipeline

India has been approached by Eliat-Ashkelon Pipeline Company to participate in a multi-billion dollar crude oil pipeline. The company once used to be a joint venture between Israel and Iran. Once this project is completed India would get access to the vast oil reserves of the Black Sea and Caspian Sea. India hasn’t had access to these reserves since heavy oil & gas carriers cannot  pass through the Suez  Canal.

This pipeline, although costlier, would be more secure than the other options. It would also open up oil reserves of the Algeria and Libya where the state-owned company ONGC has been trying to acquire oil fields. A pipeline through the region is preferable since it is a major choke point in global oil routes and would obviate the high shipping costs bringing down the oil import bill.

On the face of it India seems to have plenty of options to get the crucial energy supply for its booming economy but each of these option pose serious problems – economic, strategic or security related. India, being a big geo-political player and a huge consumer of energy, should take whatever legitimate leverage it could get to ensure a cheap, secure and uninterrupted energy supply.

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