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Oil needs change strategic face of Asia

Oil needs change strategic face of Asia
By Andrea R. Mihailescu and Martin Sieff
UNITED PRESS INTERNATIONAL
Published March 3, 2005

WASHINGTON -- The relentless demands of the world energy market have brought three major nations of Southern and Southwest Asia into a new partnership that crosses and obliterates old rivalries and tensions.

On Feb. 21, Iranian Foreign Minister Kamal Kharrazi announced that India was considering joining a proposed gas pipeline project stretching from Iran to India through Pakistan.

"The Indian government's recent approval of the gas pipeline has created an encouraging atmosphere for pushing ahead this highly important project, which no doubt would have a positive impact on regional convergence," Kharrazi said. "Laying the Iran-Pakistan-India gas pipeline would be the best and most desirable step towards enhancing cooperation between Iran and India in the field of energy."

Kharrazi's comments followed the signing of a far reaching energy agreement between the two countries in January 2005 whereby Iran agreed to sell India 7.5 million tons of liquefied natural gas, or LNG, a year for 25 years. In return, India agreed to participate in developing Iran's oil fields and extracting some 100,000 barrels of oil per day from them. Kharrazi in his Feb. 21 speech described that deal as "one of the most significant results of the strategic agreements reached by the two countries so far."

"The Iran-Pakistan-India pipeline would be the best and most desirable step towards enhancing the cooperation between Iran and India in the field of energy," the Iranian foreign minister said. "The lower cost of the piped gas, the creation of new job opportunities, and the acceleration of economic progress and foreign investment in the countries of the region are some of the main motivations for implementing such a large project."

India's Petroleum Minister, Mani Shankar Aiyar, a strong supporter of boosting energy links with Iran, hopes that agreement on the gas pipeline deal will be finalized when he visits Tehran in June.

The pipeline would extend 1,724 miles across southwest Asia, and 472 miles of it would cross Pakistan.

Aiyar said: "There will be two sets of bilateral agreements. In the first one, Iran will enter into a pact with India for delivery of natural gas at Indian borders, while the second would be between Iran and Pakistan on how the gas is to be transported to the Indian border." According to Aiyar, Iran would not enter into any agreement with Pakistan and it is the responsibility of Iran to negotiate with Pakistan on the pipeline's construction and ensure the safety of supplies on Pakistan's territory.

Pakistan appears eager to play ball with the project. Pakistan's Petroleum and Natural Resources Minister Mir Naseer Mengal has announced that Pakistan was eager to begin constructing the proposed Iran-Pakistan gas pipeline project. And he said that Pakistan had little concern over the liquefied natural gas deal between Iran and India, stating, "It (the deal) has nothing to do with the proposed gas line project."

According to Mengal, India may agree on laying the pipeline from Iran via Pakistan up to India's territory. Mengal said: "Whether or not India joins the project, Pakistan will continue efforts for its realization

But if the project goes through, it will have far-reaching geo-strategic implications for all three countries. For Iran has already singed an enormous $70 billion oil and natural gas deal with Iran last October that locked both countries into a 30-year relationship. Under that deal, Iran is committed to supply 150,000 barrels of crude oil a day to China for the next 25 years at market prices from its giant Yadavaran field.

The emerging natural gas deal with India does not appear -- as yet -- to be remotely on the same scale. But it serves notice that Iran is eager to seek lucrative energy deals with both the emerging potential superpowers of mainland Asia. And having the friendship and energy dependence of China and India will clearly be a crucial counterweight to the current U.S.-Iranian situation.

Nor was the Indian deal with Iran done behind China's back. For both nations are now seeking to harmonize their ravenous thirst for Middle East -- and other sources -- of oil and gas to avoid a potentially dangerous energy rivalry getting out of control.

On Jan., 6, Aiyar played host to an "energy summit" of petroleum ministers from China, South Korea and Japan, as well as from eight nations in the Organization of Petroleum Exporting Countries to try and create a new "Organization for Oil Importing Countries."

It remains to be seen if such an organization can be created, or whether even if it can, whether it will be able to defuse and harmonize the ever more ravenous energy needs of India and China, let alone Japan.

But there is no doubt that Aiyar is seriously committed to the idea. He has long been a proponent of reviving and transforming the old Non-Aligned Movement ideals of the 1955 Bandung Conference in Indonesia to bring together India and China in a new partnership to lead Asia in the 21st century.

In any case, India's crucial need for Middle East oil, especially from Iran now looks certain to set limits on the degree to which it is prepared to cooperate with the United States against the major Muslim oil-producing nations of the Middle East, let alone against China.

Also, Iran is sending clear signals that the country continues to want to do business with India as well as China regardless of the current global political pressure.

And the eagerness of India and China to buy Iran's oil and gas also serves notice to Israel that its dreams of courting both Asian giants as an equal partner and, in India's case, as a potential ally against the Muslim Middle East should be discarded, or at least reduced to more realistic ambitions. Not all the high tech capabilities to a tiny country of 6 million people will weigh in the scales against the energy needs of two enormous energy dependent nations seeking the fuel to provide for more than a billion inhabitants each for decades to come.


LINK: http://www.wpherald.com/storyview.php?StoryID=20050303-122216-8972r