Mon. Sep 23rd, 2019

Pipelines to become a game changer for Pakistan’s ailing economy

Aftab Ahmed

United States (U.S) has been dictating Pakistan to secure energy supplies. Iran-Pakistan (IP) gas pipeline project is an example that has been stalled due to policy of US to dictate energy supplies to Pakistan. So, U.S wants to play a leading role in options of energy security in Pakistan. Saudi Arabia and Middle East countries have been strategic partners of U.S and Pakistan has been dependent on Middle East countries. Pakistan should work out other regions like Turkmenistan and Russia for pipeline projects amid conflict in Middle East.

Pakistan had been working on IP gas pipeline project but this project suffered a delay due to threats of US sanctions. However, US had pushed Pakistan to Qatar to strike multibillion dollars LNG supply deals where U.S, EU and Japanese companies had shareholdings with Qatar gas.

Amid this increased role of U.S, Pakistan should have multiple options to secure energy supplies to back dwindling economy. Pipelines like TAPI and offshore are best option amid conflict in Middle East. These pipelines will help Pakistan diversify sources of energy supply to ensure energy security. These two projects are being termed as a game changer for Pakistan’s economy that is suffering now.

These projects will also connect different regions to bring peace in Afghanistan due to generating economic activity. These projects will serve to reduce reliance on gas imports through ships and neutralise US role in energy politics.

PPP had lost elections in 2013 due to aggravating energy crisis. PML-N government had launched campaign based on energy crisis and won elections. So, these pipelines give an opportunity to current government of Pakistan Tehreek-e-Insaf (PTI) to overcome energy shortages by laying these pipelines. This will give a trump card to Prime Minister Imran Khan in next general elections.

TAPI pipeline gas is cheaper by 10-15% compared to LNG and its supply through Tapi pipeline will generate transit fee for Pakistan as the pipeline will extend to India. The project will also create jobs for people in Afghanistan and pave the way for peace there.

The Strait of Hormuz is said to be a strategic sea route to connect Middle Eastern crude producers with key markets in the Asia-Pacific, Europe, North America and beyond.

Many countries like Saudi Arabia, Iran, the United Arab Emirates (UAE), Kuwait and Iraq use this route to export most of the crude oil. Pakistan imports oil from Kuwait, Saudi Arabia and the UAE. The Strait of Hormuz is also said to be an important route for around all the liquefied natural gas (LNG) shipments from key exporter Qatar. Pakistan is currently importing 500 million cubic feet of LNG per day (mmcfd) from Qatar.

Read:https://newztodays.com/saudi-arabia-presses-pakistan-to-award-multi-billion-dollars-lng-supply-contract/

Recent tensions between Iran and the US in the Middle East have raised concern over energy supplies. If the tensions deepen, oil and gas imports by Pakistan may come to a halt, which will pose a threat to energy security. So, the situation also demands to focus on pipeline projects to secure alternate options of energy supplies in future to meet local demands.

Offshore pipeline is on alternate option to secure energy. Pakistan and Russia have already signed an agreement last year to conduct feasibility study on the planned $10-billion offshore gas pipeline. Russia’s energy giant Gazprom will conduct the study and will build the pipeline.

The project is strategically very important as it will connect the two distant countries. Close ties between Pakistan and Russia will also help the former to gain access to the Russian market in order to boost overall exports, which remained stagnant during the five-year tenure of the previous Pakistan Muslim League-Nawaz (PML-N) government.

Tapi Company is working on the Tapi gas pipeline project. Groundbreaking of the project has taken place in Turkmenistan and Afghanistan. Work on the pipeline is under way in Turkmenistan and civil works on some points have also started in Afghanistan.

The beginning of construction work on the project in Pakistan is expected in October this year. Tapi Company has shortlisted some companies including prominent European names for building the pipeline. Financial close of the project is expected to be achieved by the end of this year.

Turkmenistan has arranged some funds from the Asian Development Bank (ADB) and the Islamic Development Bank (IDB). Some of the financing will be arranged by foreign firms on the supplier credit basis.

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