Iran's "China card" - - IP pipeline: When will China join?

[Dover]

Iran-Pakistan pipeline: When will China join?
Posted on March 6, 2010 by The Editor

For over a decade Iran, Pakistan and India (IPI) have took pains at negotiating a major pipeline deal whereby Iran would send natural gas from its territory to the region. Yet geopolitical and commercial issues have repeatedly prevented the deal’s fruition despite Tehran’s growing need to diversify gas sales to Asian markets and Asian countries desire to find a stable, reliable source of gas supplies.

In recent years, India’s participation in this project has become more uncertain, which is partly responsible for the long delay that the project has suffered to date. Iran’s repeated attempts to raise the price of gas, U.S. pressure on India to refrain from participating in the pipeline, external skepticism about Iranian capability to fill the pipeline as it promises, Indian concerns about the overall stability of Pakistan, and in particular, the possibility of terrorism in Pakistan’s Balochistan province through which the pipeline would travel all contributed to India’s angst (Jane’s Intelligence Review, February 11). Indeed, Iran recently warned India that there is a limit to its patience in waiting for New Delhi to decide (Thaindian.com, February 9).

Iran was apparently able to present this ultimatum because it believes that it now has the “China card” in its deck. In early February, Iranian Foreign Minister Manucher Mottaki reportedly said that Iran was ready to start the pipeline at any time—even without India—and urged Pakistan not to heed U.S. pressure against the pipeline as China could soon replace India in the deal (Press Trust of India, February 8). Background Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari inked a $7.5 billion agreement in Tehran on May 23, 2009 to transfer gas from Iran to Pakistan. According to the deal, Iran will initially transfer 30 million cubic meters of gas per day to Pakistan, but will eventually increase the transfer to 60 million cubic meters per day. The pipeline will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 bcm of natural gas per annum, which is expected to be raised later to 55 bcm (Zawya.com, February 5).

After many months of negotiations, on February 11, 2010 Islamabad and Tehran were able to finalize the agreement on the issues, including the issuance by Pakistan of a “comfort letter” that provided Iran with the assurance that India—or China—could be brought into the project later. The two parties have vowed to sign the formal agreement by March 8 in Ankara, Turkey. The News reported: Under the comfort letter, the government of Pakistan would allow the third country to import gas through IP line in case any country in future comes to join the project, but the permission will be subject to the gas tariff and transit fee to be worked out as per best practices of that time (The News , February 15). Chinese Interests in the IPI Pipeline Perhaps the most interesting aspect of Iran’s most recent announcement is that China has yet to comment publicly on the pipeline except that it is studying the Pakistani proposal. And that was in 2008.

Chinese foreign minister, Yang Jiechi said at that time: “We are seriously studying Pakistan’s proposal to participate in the IPI gas pipeline project” (Steelguru.com, May 3, 2008; Asia Times Online, March 6, 2008). Pakistan clearly wants China to join the pipeline for many reasons. Islamabad desperately needs the gas that might not come otherwise if there is no third party to make the deal profitable to Iran. Second, it would gain much revenue from the transit fees for the gas going to China and benefit considerably from the ensuing construction of infrastructure within Pakistan. Third, it would further solidify its “all-weather” relations with China. Those goals have always been part of Pakistan’s foreign policy and explain not only its interest in the original pipeline plan but also its previous invitations to China to join the project. The prospect of an invitation to China was also used in the past to galvanize India’s decision-making process regarding the pipeline (Steelguru.com, May 3, 2008; Asia Times Online, March 6, 2008)...cont'd


http://rupeenews.com/2010/03/06/iran-pakistan-pipeline-when-will-china-join/



Beijing-bound Karzai seeks China help in peace push (not to mention discussion of the IP)

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/22/AR2010032201119.html