Dysfunctions
Turkmen, Iranian Presidents Moving Ahead With Rival Pipelines
By Bruce Pannier, RFE/RL 1/5/08
May 10, 2008 - 10:43:32 AM

Berdymukhammedov was in Kabul on April 28, making the case for the Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI), while Ahmadinejad was in Islamabad the same day, discussing details of the Iran-Pakistan-India pipeline (IPI).

  Both pipelines have several pros and cons, and the consumer countries -- Pakistan and India -- have signaled they want both TAPI and IPI to help sate their energy needs.

Berdymukhammedov spoke about TAPI with Afghan President Hamid Karzai on the first-ever visit by a Turkmen president to Kabul in independent Turkmenistan's 17-year history. The two countries signed deals on energy, transport, and culture. The meeting came just days after representatives from their countries, along with Pakistan and India, signed an agreement to start construction of the pipeline in 2010, with operations slated to begin in 2015.

"We had a discussion with the Turkmen president on a series of issues that involve our two countries," Karzai said. "The main areas of our talks were on the exchange of energy between the two countries, developing transportation, communications, and on the gas pipeline that will export natural gas from Turkmenistan to Afghanistan, Pakistan, and India. We discussed a railway between our two countries -- and how to extend the railroad through Afghanistan to neighboring countries. Also, we spoke about the importation of electricity from Turkmenistan to Afghanistan. And we had a discussion on terrorism threats and regional problems."

New Era' In Relations

The Turkmen president hailed the event as signaling a "new era" in relations between the two states. "Today, our historic friendship has endured much, but we are entering a completely new era that brings broad possibilities for developing the mutual and useful relationship between our countries," Berdymukhammedov said.

According to plans, the 1,680-kilometer TAPI pipeline would start in the Turkmen city of Dauletabad and pass through the Afghan cities of Herat and Kandahar before entering Pakistan at Quetta and proceeding to the Indian border town of Fazilka. Six compressor stations will be built along the route. Plans for the pipeline call for it to export some 33 billion cubic meters (bcm) of gas from the field annually. Estimates of the cost for building the TAPI pipeline range from $6 billion to $7.5 billion.

Analysts point to two major drawbacks with TAPI. The first is the route through Afghanistan, where it will be difficult to ensure security for the pipeline, especially as it turns eastwards and approaches Kandahar, where fighting between militants and the Afghan government and foreign forces is still a daily occurrence. Turkmenistan and Pakistan have been trying for more than a decade to get the pipeline built, but security problems in Afghanistan have always held up the deal. If security could be guaranteed, Afghanistan stands to receive large and badly needed revenues from transit fees.

The second problem is the question of how much natural gas Turkmenistan actually has. The April 28 edition of the Russian daily "Kommersant" points out that Turkmenistan has a contract with Russia's Gazprom to export up to 50 bcm of gas annually to Russia for two more decades, a contract with China that starts in 2009 for 30 bcm annually, and a deal with Iran for 8 bcm annually. Berdymukhammedov also promised earlier this month to send 10 bcm to Europe Union countries, though the details of that agreement are still unclear. The acceptance of the TAPI deal would bring annual Turkmen gas exports to well over 100 bcm annually -- a huge amount of natural gas to export when Turkmenistan's proven reserves of gas are not fully known.

No Iranian Participation

But TAPI enjoys two advantages that the IPI does not -- support from the Asian Development Bank (ADB) and no Iranian participation. The ADB's support gives the project a greater international profile and, since Iran is not involved, TAPI may also find other investors -- including U.S. companies that are forbidden by U.S. law to deal with Iran, and European investors who fear U.S. sanctions if they commit to IPI instead of TAPI.

Pakistani President Pervez Musharraf (right) meets with Iranian President Mahmud Ahmadinejad in IslamabadAhmadinejad's visit to Pakistan was similar in nature to Berdymukhammedov's in Afghanistan. Pakistani and Indian officials also met about IPI last week in Islamabad when Indian Petroleum and Natural Gas Minister Murli Deora was there for talks. Iran, under intense pressure from many countries over its controversial nuclear program, would benefit greatly from signing such a major deal, which would also bring in much-needed revenue.

Reports from Islamabad on April 25 indicated that India and Pakistan were close to finalizing their part of the deal. Ahmadinejad is trying to push the potential partners to sign that deal. For its part, Iran has already started constructing the pipeline on its territory and could have its section to the Pakistani border completed by 2012.

The IPI pipeline would be some 2,600 kilometers long and would cost an estimated $7 billion. The IPI pipeline would initially carry some 30 bcm annually, but within three to four years after starting up that amount would increase to 70 bcm. Iran first proposed the pipeline in the 1990s, but tensions between Pakistan and India kept the project on hold until now. In their meetings last week, Pakistani and Indian officials stressed that cooperation between the two nuclear neighbors is better now.

Washington's Wrath

IPI's disadvantage is the U.S. objection to the pipeline -- but both Pakistan and India have indicated publicly that their countries' demand for energy is such that Islamabad and New Delhi are prepared to endure the possibility of complicating ties with Washington. The ADB has not come out in favor of IPI, and many potential international investors may be frightened of facing Washington's wrath for being part of IPI.

A distinct advantage for IPI is that there are two major companies that have expressed interest in joining the project -- Russia's Gazprom and the China National Petroleum Corporation. Gazprom has supported the IPI project for several years, but China's interest is relatively new and may have to do with a proposal from Pakistani President Pervez Musharraf earlier this month that his country could build a "Karakorum" pipeline to deliver gas or oil to China through mountain passes in the Himalayas. Such pipelines could bring not only Iranian natural gas but also gas and oil delivered to Pakistani port cities along the Arabian Sea.

Another meeting on TAPI -- at which the major parties will attempt to agree on transit prices -- is scheduled for May. Meanwhile, Ahmadinejad travels to Afghanistan on April 29.