9/3/12 Transnational Gas Pipelines

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TransnationalGasPipelines
1.NaturalGastheCleanFuelof21stCentury:
Natural gas is a clean fuel and would be increasingly used in the 21st century. Gas is a mainly used in the power sector but is
alsousedinrefining,industryanddomesticconsumption.
2.NaturalGasKeytoIndia|sEconomicGrowth:
Indiadoesnothavethegasreservestomatchitsgrowingneeds.Indiaimports67millioncubicmetresofgasperdayaspartof
its requirement of 150 million cubic metres (mcm) of gas per day. By 2020 India|s demand for gas could go up to 400 mcm per
day.Thus,anassuredsupplyofgaswillbethekeyIndia|seconomicgrowthof89percent.
3.TransnationalGasPipelines:
TheSovietUnionconstructedthefirsttransnationalgaspipelinesinthe1970stosupplynaturalgastoWestGermanyandother
parts of Western Europe. Currently Russia meets 30 per cent of Europe|s gas requirements. Currently over 100 gas pipeline
projectsvaluedat$100billionarebeingimplementedacrosstheglobe.
4.MainSourcesofNaturalGasareinAsia:
Analysts point out that the main sources of natural gas are in Asia. Russia|s Asian area has 27 per cent of the world|s proven
reserves, with Iran (15 per cent) and Qatar (14 per cent) following. Over 70 per cent of the world|s reserves of natural gas are
foundinnorthernCentralAsiaandtheGulf.
5.TransnationalGasPipelinestoIncreaseinAsiawithIncreaseinDemandforGas:
ThetransnationalgaspipelinesacrossAsiaaresettomultiplywithanincreaseingasdemandoverthenextfewyears.Thus,as
theenergyrequirementsofAsiaincrease,thetransnationalgaspipelineswillplayanincreasinglyimportantroleinmeetingthese
demands.
6.AdvantagesofGasPipelines:
A.GasPipelinetheCheapestModeofTransportation:
TherearethreewaysoftransportinggasbyshipsasLiquefiedNaturalGas(LNG)throughdeepseapipelineorbygaspipelines
on land. Analysts point out that world over, gas pipeline transportation is the preferred mode for gas conveyance as it is the
cheapestanddoesnotentailanylossofenergyinconversion.
B.IndiaShouldMakeGasaStrategicDeterminant:
Analystspointoutthatofthetotalglobalenergyconsumptioninworld,gasaccountsfor30%.Gaswillbeakeycommodityinthe
overallcontextofIndia|snationalsecuritycalculus.Gasisanecofriendlyenergyproductandwillplayakeyroleincontributing
toIndia|senergyneedsfromautomobilestoindustrialuse.Indiashouldmakegasastrategicdeterminant.
C.GasPipelineswillOffsettheHighCostofCrudeOil:
ExpertspointoutthatinviewofIndia|sgrowingenergyneeds,gaspipelinesareseenasthebestoptionforIndiagiventhehigh
costofcrudeoilandpetroleumproducts.
D.SecurityRiskcanbeOffsetbyEconomicGains:
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D.SecurityRiskcanbeOffsetbyEconomicGains:
Analystspointoutthatthesecurityriskstogaspipelinescanbeovercomebyaninternationalconsortiumwithpenaltiesfornon
supply. The gas pipelines can bind countries through close economic ties, improving relations and avoiding hostilities. Thus the
securityriskscanbeminimisedbythegainsofeconomicprosperity.
E.WidenandDeepenEconomicRelationsinSouthAsia:
AnalystspointoutthatthegaspipelineprojectsmayinfactwidenanddeepeneconomicrelationsinSouthAsia.Theycouldlead
totheestablishmentofthemuchneededtrustandconfidenceamongIndiaanditsneighbours.
F.BigConfidenceBuildingMeasurewithPakistan:
SectionsofIndianindustrywelcomedtheproposedgaspipelineprojectsbyemphasisingthattheprojectscanactasapotential
conduit for peace and a big Confidence Building Measure (CBM) between India and Pakistan. The gas pipelines could lead to
diplomaticandcommercialdividends.
G.IncreaseStabilityintheRegion:
Analysts point out that the gas pipelines will bring direct and indirect benefits to the transit countries. Thus, Pakistan and
Afghanistan,whichhaveinternalinsurgencyproblems,willbenefitfromthetransitofgaspipelinesasitwillguaranteeasourceof
incomeandgenerateemployment.Thiscouldhelpincreasingstabilityintheregion.
7.RisksInvolved:
A.SecurityRisks:
Analysts point out that gas pipelines face the security risks and require credible national guarantees. Onshore pipelines are
insecure and can be blown up by militants. Assam and Balochistan are the prime examples. It is also pointed out that the gas
supplying nations, Iran, Turkmenistan, Myanmar and Bangladesh are not stable democracies. The transit country Pakistan has
problemswithIndiaandisveryunstable.AnalystsfeelthatgiventhehistoryofIndoPakrelationsandthegrowingextremismin
Bangladesh,thevisionoffriendshipthrougheconomicintegrationisgamble.
B.TransnationalPipelinescanbeUsedasPoliticalTools:
Analysts point out that energyrich countries are using the transnational pipelines as political leverage. These countries use the
pipelinestoforgepoliticalalliances,punishenemiesandextractconcessionsfromconsumernations.
C.HighEconomicCost:
Theenergyrichcountriesdemandahighercostforthesupplyofgas.Thus,theIranPakistanIndiaprojectisunabletoprogress
furtherduetoIran|sdemandforahigherprice.
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