India shy of joining Russia's offshore gas pipeline

Aftab Ahmed

Islamabad: India is shy of moving ahead on Russia’s offshore gas pipeline project due to a diplomatic row with Pakistan.

Pakistan and Russia had signed an inter-corporate agreement in February 2019 in a bid to build an offshore gas pipeline.

India has been an ally of the United States (US) for a long. Though India had a relationship with Russia, its tilt had been more towards the US.

Even in a transit trade agreement between Pakistan, Afghanistan, and Tajikistan, India had been a bottleneck. Kabul had insisted on Pakistan the included India in the transit agreement. However, Pakistan had refused to include India in this deal.

Now, Russia wants to build an offshore gas pipeline from Iran to pass through Gwader to India. It had also planned to extend this pipeline to Bangladesh.

In the meantime, the US is also backing the TAPI gas pipeline that is a competitor to the Russian offshore gas pipeline. Turkmenistan also plans to extend this pipeline to Bangladesh.

So, this is regional politics, and big players are playing their games to capture the market of Pakistan, India, and Bangladesh.

India is reluctant to step ahead on an offshore gas pipeline in a recent development Russia wants to build.

There has been some development in the recent past that was not in favor of India. China made a footprint in Iran by signing deals, whereas India had to lose those deals that may also be one reason it does not seem ready to join this project.

Energy giant Gazprom of Russia and Pakistan,s state-run Inter State Gas Systems (ISGS) have signed a Memorandum of Understanding (MoU) to implement a US$10 billion offshore gas pipeline project.

Russia is looking for alternative markets following a long-running tussle with Europe and the US over the annexation of the Ukrainian region of Crimea.

It wants to capitalize on increasing energy demand in South Asia.

American energy giant ExxonMobil had also landed in Pakistan to engage in offshore drilling. However, it later announced to pull out from Pakistan.

Petroleum division informed that in the first instance, a feasibility study was to be conducted by Gazprom at its own cost with no financial implications on Pakistan.

Specific economic benefits such as transit fees will accrue to Pakistan if Russia executes the project. Moreover, the subject project would bring Pakistan on the world map as the transit country for offshore gas pipelines.

Besides, Pakistan will also have an option to off-take gas from the transit gas pipeline.

North-South Pipeline Project

In addition to an offshore gas pipeline, Russia was also working with Pakistan on North-South Pipeline Project to pump LNG from Karachi to Lahore.

Pakistani side had also allocated funds to execute this project. Pakistan will have 86 percent shareholdings in a new format, whereas Russian companies would retain 24 percent shares.

The Pakistani side will also invest in line with shareholdings from the Gas Infrastructure Development Cess (GIDC). Russian companies will execute this project and will be its operator.