Iran-India gas pipeline laid low by geopolitics

Mani Shankar Aiyar is known for the many controversies sparked by his provocative comments and controversial ideas. As Minister for Petroleum and Natural Gas in the first UPA government of Manmohan Singh, he rattled the global energy markets by vigorously promoting a compact of Asian countries to ensure their energy security. Aiyar’s most quoted statement that “the 21st century will indeed be the Asian century only if Asian countries join hands in a continent-wide bid at bringing Asia together and keeping Asia together” was made in Beijing in January 2006. In the second part of his interview with Latha Jishnu, the former minister, now a nominated member of the Rajya Sabha, reveals the politics of the Iran-Pakistan-India pipeline and why India finally pulled out of the project. Excerpts:

By Latha Jishnu
Published: Monday 30 December 2013

Mani Shankar AiyarWhat was this grand vision of an Asian Gas Network that you promoted?

I thought of an idea of bringing producers and consumers of oil together. So, I convened a meeting with my counterpart in Saudi Arabia Ali Al-Nuaimi. Guess what? My co-chairperson was the Saudi minister for oil. Nuaimi’s theory was that buyers and sellers should not be in opposite camps but should come together for peace. We would have two meetings of oil buyers and oil sellers—one of northern producers and sellers, and another of those in the south. Out of this experience came an idea which I placed before an international conference which is held in February every year by GAIL: the idea of an Asian gas network–a network that we could all feed into and draw from. I said it is a distant idea but we could set up this network with bilateral lines between producers and consumers and then try and link them up so that there is always an assured market for gas. If one buyer goes down there is always another to pick up the slack.
Given the hostilities and fractious politics of the region, was it not too ambitious?

True, we are the most divided continent in the world. The Europeans had moved to the European Union, the Americas have the Organization of American States (OAS) and Africa had the Organization of African Unity (OAU) now the African Union. But we remain the most disunited continent The Europeans came together on the basis of iron and steel. What are our two important commodities Oil and gas. I said let us work towards an Asian oil and gas community as a forerunner to an Asian Union which would realise the first objectives of our foreign policy as enunciated at the Asian Relations Conference convened by Nehru even before Independence. Most of the participants were from various movements and not the government. And his idea was that Asian resource should be converted into Asian resurgence to restore Asia to its premier position in the world economy that it held till the middle of the 18th century. And the first thing we should do towards moving to this goal I said is that we should give up our hostility to Pakistan and build the Iran-Pakistan-India pipeline And I think that is where I made a fatal mistake. That was in early January 2005.

What went wrong?

I knew the Pakistanis very well, having cultivated them for decades and although Pakistan Minister of Petroleum Amanullah Khan Jadun was a new person, we hit it off so well that the vibes were outstanding. I went to Lahore and Islamabad, where we had a very successful round of meetings. Then I went to Karachi on personal business and from there to Tehran. At the meeting, the opening line by the Iranian Oil Minister Bijan Namdar Zanganeh was, “So you have been conspiring with Pakistan against us.” Phew! I just looked at him. I had told Jadun, “Everyone thinks the problem is with India and Pakistan, but no, it isn’t. We are both buyers and if we don’t hang together they (Iran) will exploit the two of us and we will end up paying much, much more for this gas than we should. So as buyers, when we negotiate prices, we should be together. Anyway, the Cabinet has only authorised me to havebilateral discussions and we can do this when we move into the multilateral stage. Then shoulder to shoulder we have to stand.”

There was a perception in India that Pakistan was not really interested in the pipeline and was playing games with India.

I had become very friendly with Jadun because I found out he had been elected from Abbotabad from where Ayub Khan also won. I told him my father-in-law was Ayub Khan’s best friend and this brought us closer. Jadun organised a power point presentation which for me completely contradicted the Union Ministry of External Affairs’ (MEA) view that Pakistan was simply dragging us into it because they had their own Sui gas and didn’t really need the Iranian gas. This presentation showed that Sui gas was running out so fast that by 2020 the imports were going to cross exports. And Pakistan has no coal. They have no alternative to gas which they use for heating and cooking. Not in cylinders but as piped gas. So every rich man in Karachi and Islamabad, but more in Islamabad, keeps warm in winter with Sui gas and gets his water heated by Sui gas. There is such a strong elite interest in continuing the gas supply that they are bound to get it in.

But there were security concerns, too. Even now their gas pipelines get blown up regularly.

All we needed to do was to work out an arrangement in terms of which if the gas is ever stopped, there are consequences. I started talking to British Petroleum and they told me we could actually keep the pipeline under surveillance 24X7 by sitting in a third country. Or rather a fourth country in this case. You set up a small room and monitor the entire pipeline. The moment something goes wrong you come to know in real time there is a problem and you notify all three countries. And if there is delay in repairs, the contract would say that Iran will not supply the gas. Iran will agree because its bigger buyer is India; the smaller buyer is Pakistan. So why should the Iranians lose their gas and why would Pakistan be willing to cut off their nose? The chances of this happening were nil. So, to reinforce this idea I looked at the Baku-Tbilisi-Ceyhan pipeline and visited the BP office in Baku and then in Ceyhan.

(The Baku-Tbilisi-Ceyhan pipeline is 1,768 km long, carrying crude oil from the Azheri-Chirag oilfield in the Caspian Sea to Ceyhan, a Turkish port in the Mediterranean. It links Baku and Tbilisi, the capitals of Azerbaijan and Georgia, respectively, before reaching Ceyhan. Oil started flowing in the pipeline in May 2005.)

They said to me laying a pipeline is no problem. Azerbaijan is involved in even more sickening fratricidal war with Armenia than we are with Pakistan. The pipeline is accessible to terrorists of all kinds. There is Muslim Azerbaijan which is fighting a war with Armenia and is allied to Christian Georgia. On Georgia’s southern borders are Muslim areas such as Chechnya, South Ossetia and Abkazia which are all in revolt. Then are the Kurds who are in revolt against the Turkish regime. There are terrorists wandering all over the place. So I asked, how do you assure security? They said contracting has to be very careful. I asked them if they could come to India and give us a full technical explanation presentation on this and they said that they were happy to help.

But this didn’t happen?

While I was in Turkey, on my way to Ceyhan, I got a message from PMO asking why I hadn’t taken the PM’s permission before going to Turkey. I said I always do. So I came back and went to see Manmohan Singh and he said, ‘You know Mani, your pipeline won’t work’. Won’t work? If it hadn’t been for him we would not have started the whole exercise. Then he said, ‘Who will build it for us?’ I said Halliburton is ready to help us. Halliburton, Dubai which means the Iraq Libya Sanctions Act won’t apply to it. The Russians have begged me to build it. Anyway what’s the big deal in building a pipeline?

Then, he said, there is the money. I told him that the Iranian part would be paid for by the Iranians and built by them. Pakistan will build their part and pay for it. That leaves our share—about a couple of billion dollars. So what? It’s just about Rs 8,000 crore spread over three or four years and we were going to get all the gas we want.

The PM wasn’t convinced?

I could see the enthusiasm had gone. He let me go and a week later I came to know that we had entered into a nuclear deal with America. And they didn’t have to say that we have to cut out Iran. So, it never happened.  Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI) was not happening then. Bechtel first said there was lots of gas, but when they pulled out they said there was no gas in Turkmenistan. And MEA just kept believing them. Now they say there is gas and we are with TAPI.
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