Can a pipeline deal stop an India/Pakistan war?

From today's Guardian.

SS


Pipe dreams 

As Pakistan and India appear on the brink of a devastating conflict, some on 
the subcontinent hope the prospect of billions of dollars in oil and gas 
revenues may yet hold them back from war, writes Rory McCarthy 

Friday May 31, 2002 

Yesterday in Islamabad the leaders of Pakistan, Afghanistan and Turkmenistan 
met to revive the ambitious dream of building a £1.4bn gas pipeline to run from 
central Asia, through Afghanistan and down to the Arabian Sea off the southern 
Pakistani coast. 
Few believe Afghanistan is secure enough to take such an expensive project. 
Most provinces are still ruled by rival warlords who often owe fickle 
allegiance to the government in Kabul. Any pipeline that is on or near the 
surface would be vulnerable to attack. 

Yet the dream of a 930-mile pipeline that would carry 23bn cubic metres of gas 
a year and bring the Afghan government an annual £205m in transit fees alone is 
too good to resist. 

"Now with the gradual return of peace and normality in Afghanistan, we are 
confident that this mega-project will be realised in the near future," said 
General Pervez Musharraf, Pakistan's military ruler. The prospect of a 
lucrative pipeline deal may yet be a key factor in encouraging the Islamabad 
regime to pull back from the threat of a devastating war with India, which 
could scuttle the plans as quickly as they have been revived. 

Gen Musharraf signed a new agreement on the pipeline yesterday with Hamid 
Karzai, Afghanistan's interim leader, and Sapamurat Niyazov, the Turkmen 
president. The US oil giant Unocal has been looking at the project for the past 
decade, battling against an Argentinean rival, Bridas Corporation, which also 
hoped to win the rights. In the early days of the Taliban regime Unocal 
officials held meetings with the ultra-Islamic clerics hoping for their 
support, but with little success. Now Unocal's first feasibility study needs to 
be updated and the project has to be put out to tender and the funding secured. 

Gas analysts warn the project would be vulnerable to disruption by warlords 
unless it was buried deep enough in the ground, which would add considerable 
extra costs. Already the size of the project means large industrial buyers 
would be expected to pay over the odds for the gas at first. Pakistan is hoping 
that the World Bank or the Asian Development Bank might step in and help 
finance the deal. 

Gen Musharraf, his eyes clearly on the vast earnings and strategic importance 
oil and gas could bring Pakistan, is also looking at a second £2bn pipeline 
that would run from Iran through Pakistan into India. Although the Indian 
market offers a huge opportunity, the pipeline project would have to overcome 
five decades of hostility between the nuclear-armed India and Pakistan. 

With the two nations threatening war, now seems an unlikely time to start 
talking about a pipeline. Yet senior Russian officials have visited Pakistan 
this month, ostensibly to talk about peace with India but also to push 
Gazprom's bid to build the pipeline. If Gen Musharraf is unable to build a 
peaceful relationship with India some have suggested bypassing Pakistan by 
building an underwater pipe from Iran round to India. That would cost Pakistan 
dear.

Email
rory.mccarthy@guardian.co.uk

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