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The State Blog | Nukes and Pipelines

by ALEX VATANKA

03 Aug 2012 23:02Comments

U.S. seeks to thwart construction of Iran-Pakistan gas conduit.

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The State is a weekly column about Iranian security and diplomatic issues. Alex Vatanka is a scholar at the Middle East Institute in Washington, D.C. Previously he was the managing editor of Jane's Islamic Affairs Analyst.

[ comment ] In recent years, Tehran has hoped to become a key strategic energy provider to the energy-craving subcontinent. This week's power blackouts in India and Pakistan's chronic electricity shortages could in theory bolster Iran's appeal to both Islamabad and New Delhi. Iran is after all close by and it has some of the world's largest oil and natural gas reserves. In fact, one big-ticket Iranian energy project that has yet to formally succumb to U.S. pressure is a planned 1,700-mile-long pipeline to deliver gas to Pakistan, the so-called Peace Pipeline. But will the pipeline finally be built after years of delay in the project's implementation? Well, not if the United States can help stop it. The failure of Iran to realize this pipeline is to a large extent tied to a broader phenomenon: Tehran's isolation on regional and international stages.

Back in the 1990s, Iran lost big in the Great Game for the hydrocarbon riches of the Caspian Basin. Thanks to intense U.S. lobbying, Iran was never allowed to become a significant player or even a conduit for Caspian oil and gas exploration and exports. The U.S. policy of isolating Iran from regional energy projects is still very much alive and that is why the Peace Pipeline to Pakistan is anything but a done deal. In fact, this week Pakistan's Express Tribune reported that the United States is intensifying efforts to broker a deal between Pakistan and Qatar in order to kill the Peace Pipeline once and for all. According to the paper, "US embassy officials in Pakistan have also been lobbying and holding meetings with stakeholders of the power and energy sector to try to convince [the Pakistanis] that the Iran gas project will not be viable for Pakistan."

If carried out, the Qatari gas would come from a giant field the country shares with Iran, the so-called South Pars/North Field, located in the Persian Gulf. Thanks to Iran's isolation, Qatar is, according to official Iranian estimations, years ahead in exploiting its part of the gas field while Iranian efforts are hampered due to mismanagement and lack of access to capital and technology. This week, the China National Petroleum Corporation pulled out of South Pars citing "unprecedented delays" in the project.

To be fair, not all the obstacles facing the Peace Pipeline can be attributed to U.S. lobbying. The Iranians and Pakistanis have long argued over the price of gas shipments and financing of the project. But U.S. opposition to this and similar strategic projects involving Iran as a stakeholder cannot be denied or underestimated. The fact that Iran is losing $133 million a day in lost crude export revenue -- thanks to sanctions imposed on Tehran for its nuclear program -- made headlines this past week. It is a substantial financial loss, but such loses can still be quickly overturned as soon as the traditional buyers of Iranian crude can return without facing the wrath of the United States. What receives far less attention is the long-term damage and price Iran will pay for having cornered itself -- thanks to its policies -- into a position where it cannot be a stakeholder in regional energy projects despite its strategic location and abundance of energy resources and energy-craving customers nearby.

Copyright © 2012 Tehran Bureau

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