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Wednesday, February 16, 2005

A GOOD DAY FOR GAS IN TURKMENISTAN?: INDIA AND PAKISTAN MAKE PROGRESS ON PIPELINE DEAL

As talks continued today between Pakistani Foreign Minister Khursheed Mahmood Kasuri and his Indian counterpart, Natwar Singh, progress was made on a the issue of a gas pipeline stretching from Afghanistan’s north through Pakistan to India. Kasuri noted that the plan was contingent upon Pakistan meeting India’s “security concerns”. New Delhi is afraid not only of sabotage, but also that that the flow of gas could be used as blackmail in the historically volatile relations between the Central Asian neighbors. If the pipeline project goes ahead as proposed, the gas should start flowing in 2009.

The Indian government had already announced that it will hold talks with both Turkmenistan and Iran on securing natural gas supplies. Iran contains 15.1 percent of the world’s proven natural gas reserves, second only to the Russian Federation. Turkmenistan contains an impressive 1.6 percent of the world’s proven reserves, although analysts believe that its actual reserves may be much higher.

Turkmenistan’s gas production has suffered since the fall of the Soviet Union as its relationship with Russian gas giant Gazprom disintegrated. It has also been hampered by general mismanagement at the hands of a dysfunctional government led by a dictator whose primary focus has been self-idolatry. None of this mattered much to India, however, as long as Afghanistan –through which any Indian-Turkmenistan pipeline would have to be built—was run by warlords and India stood on the nuclear brink with Pakistan.

Both those things have changed. While the security situation in Afghanistan is far from calm, the conditions are much more amenable to the presence of a gas pipeline. And with the recent progress in the dialogue with Pakistan –who also is in dire need of energy imports—the possibility of a gas pipeline stretching from Turkmenistan to India has become real.

Furthermore, Iran brings with it an even more serious drawback in Indian eyes: The Iran and Libya Sanctions Act, which imposes sanctions on non-U.S. companies investing in the Iranian oil and natural gas sectors. India fears not only sanctions on its business sector and diplomatic difficulties with the United States, but also that cooperation with Iran on energy could cost it standing in the United Nations, particularly in regard to earning a permanent seat on the U.N. security council. For India, it may be more trouble than its worth to do business with a country so firmly situated on the Axis of Evil.

Despite this positive sign, 2009 is a long way away, and the pipeline is dependent upon many quite frail contingencies. India will certainly continue its pursuit of energy from many other sources as well. India sits so close to so much of the world’s natural gas supply and yet remains so far away.

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