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Significance of Iranian gas reserves

08 July, 2005

By Mamoona Ismail


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Since the discovery of natural gas reserves in Iran in 1988, the Iranian government began increasing efforts to promote higher gas exports abroad. The prospects for profit are especially high in South Asian countries like India and Pakistan, where natural gas reserves are low and energy demand exceeds energy supply. In 1995, Pakistan and Iran signed a preliminary agreement for construction of a natural gas pipeline linking the Iranian South Pars natural gas field in the Persian Gulf with Karachi, Pakistan's main industrial port located at the Arabian Sea. Iran later proposed an extension of the pipeline from Pakistan into India.  Not only would Pakistan benefit from Iranian natural gas exports, but Pakistani territory would be used as a transit route to export natural gas to India. 

 The exportation of natural gas from Iran to India through Pakistan is a venture which may change the face of regional politics in South Asia. The potential for economic and developmental gain from natural gas will force India, Iran, and Pakistan to reassess their roles and policies in regional conflicts, like Kashmir, Afghanistan, and national security issues.  Furthermore, potential economic collaboration and gain will also lead to a possible transformation of social and political discourse between the countries, perhaps even leading to mediation and resolution of regional conflicts. In this way, the relationship between the pipeline venture and globalization is multidisciplinary. It is not characterized solely by economic factors, even though the current economic realities in Iran, India, and Pakistan do foreshadow the future necessity of economic collaboration. The multidisciplinary globalization is changing the face of regional politics and altering the social and political landscape of regions.

 Iran contains the world's second largest natural gas reserves "at an estimated 812 trillion cubic feet (Tcf)”. While Iranian natural gas consumption is high, the country desperately needs to promote export markets for gas due to its faltering economy and to meet the demands of modernization. To meet these demands, Iran has targeted emerging regional markets like South Asia for natural gas exports. The Iranian government proposed the construction of a pipeline from its South Pars fields in the Persian Gulf to Pakistan's major cities of Karachi and Multan and then further onto Delhi, India. Under this pipeline project, the Pakistani government would be able to “inject its own exportable gas for sale to the international market that is [Delhi] India” or take out gas for domestic purposes in Multan.  The pipeline would be 2,670 km long with a 48 inch diameter, and hold $3.2 billion of gas.  Pakistan could earn as much as $500 million in royalties from a transit fee and save $200 million by purchasing cheaper gas from this pipeline project

 The benefits of using natural gas for the energy sector are equally as beneficial for Pakistan as they are for India. Nearly half (49 percent) of Pakistan's energy consumption is residential, with the industrial sector attributed with the next highest level of consumption at 33.5 percent. Oil makes up 43.5 percent of energy consumption and natural gas 38.3 percent. Hydroelectric power is the main source of renewable energy for domestic use. It generates 40% of all electricity in the country. Most of this hydroelectric power is generated in northern Pakistan. While India has high utilization and supply of coal reserves, Pakistan lacks lower coal reserves. This, unlike the case in India, keeps the carbon intensity in the country low. Nevertheless, carbon levels are high due to emissions from vehicles. In 1998, Pakistan's carbon intensity was 0.47 metric tons of carbon/thousand. This is comparable to India at 0.57 and the United States at 0.21. Thus, the proposed pipeline has the potential to promote renewable resource development/deployment and improve energy efficiency.

 The development of the pipeline interacts with trade, government policies, regionalism, and globalization. The pipeline will provide much needed natural gas to rural communities in both India and Pakistan.  Families living in villages who used animal waste for fuel purposes will be able to use natural gas on small portable stoves.  For developing rural areas, households can shift from using expensive forms of energy, like coal, oil, and wood, to natural gas which is more economical and environment friendly.  Rural communities will be able to continue in their progress towards development by providing cheaper and more sources of energy.

End.

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