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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Proposed Kazakh-Indian Pipeline a Long Shot at Best

Oilmen are undoubtedly the capitalist world’s most hardy risk takers. There is no region too unsettled, nor government too corrupt, to dissuade them from their mission to drill for the ‘black gold.”

But such ambitions occasionally run afoul of geopolitical realities, and a recent proposed pipeline is due to become the poster child for ambition overtaking reality.

During March 5-6 Kazakh Foreign Affairs Minister Erlan Idrissov, formerly the Kazakh ambassador to the United States, visited New Delhi, where he received a warm welcome. Idrissov held talks with Indian External Affairs Minister Salman Khurshid, where they reviewed their bilateral relationship, which now includes defense, civil nuclear energy and hydrocarbons, with the pair agreeing to explore possibilities of creating direct trade and energy corridors between the two nations. At a joint press conference following their discussions Khurshid told reporters, "We also discussed various regional and international issues of mutual interest. We hold similar views on most pressing global problems. We agreed that the menace of international terrorism has to be fought by the international community collectively and that we must also make bilateral efforts in this direction."

In the course of the discussions Khurshid proposed a pipeline, roughly 940 miles long, to ship Kazakh oil to India. The pipeline would start in the southern Kazakh city of Shymkent, close to the Uzbek border, then run southwards through Uzbekistan. After that it would enter Afghanistan to follow the route of the proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. In a triumph of hope over reality, an Indian official involved in the discussions said, "With the TAPI pipeline on the drawing board, this pipeline doesn't seem to be a political impossibility."

Why exactly is the proposed $7.6 billion, 1,040 mile-long TAPI pipeline, favored by the Obama administration, still on the drawing board? A little history is relevant here.

Related article: The US Looks on as Pakistan and Iran Inaugurate Gas Pipeline

In a word – Afghanistan.

The TAPI natural gas pipeline has a long regional history, having first been proposed even before the Taliban captured Kabul, as in 1995 Turkmenistan and Pakistan initialed a memorandum of understanding. TAPI, with a carrying capacity of 33 billion cubic meters of Turkmen natural gas a year, was projected to run from Turkmenistan’s Dauletabad gas field across Afghanistan and Pakistan and terminate at the northwestern Indian town of Fazilka.

TAPI would have required the assent of the Taliban, and two years after the MoU was signed the Central Asia Gas Pipeline Ltd. consortium, led by U.S. company Unocal, flew a Taliban delegation to Unocal headquarters in Houston, where the Taliban signed off on the project where they doubtless enjoyed Texas beef barbeque, if not the beer.

But the Taliban’s hospitality to Osama bin Laden and al-Qaida proved fatal, as the 9-11 2001 attacks led to American-led military operations in Afghanistan that in November 2001 drove both groups from power into the hinterlands, where they have waged a guerrilla campaign ever since, throwing TAPI into the deep freeze.

Nonplussed, in 2011 Afghanistan’s security situation seemed to be improving to the point that TAPI was revived under the auspices of the Asian Development Bank, with the Afghan government projected to receive 8 percent of the project's revenue. Shortly before the ADB signed off on the project, on 12 December 2010 Afghanistan’s Minister of Mines and Industries Wahidullah Shahrani declared that “This huge project is very important for Afghanistan. Five thousand to seven thousand security forces will be deployed to safeguard the pipeline route.” Things were proceeding so swimmingly that in April 2012 during a meeting of high ranking officials from Afghanistan, Pakistan and India in Islamabad the transit fees for the TAPI gas pipeline project were agreed to in principle.

So, how much of the TAPI pipeline has been laid?

None.

Lining up credit for a pipeline traversing a war zone has proven impossible, and the same fate seems likely to befall the proposed Kazakh-Indian oil pipeline.

Related article: Keystone XL a Bullet Compared With Other Pipelines

But, “India and Kazakhstan also plan to cooperate closely in Afghanistan where New Delhi’s aid model has been appreciated by the Central Asian countries, all of whom have a vital stake in stabilizing the country.”

If twelve years of American-led military intervention have failed to stabilize a country that has effectively been in a violent civil war since 1979, then it seems unlikely that a flood or rupees and tenge will have much more success. After 34 years of conflict, Afghanistan now has an entire generation that has known nothing but war, and Indian and Kazakh economists are going to have to get creative in figuring out how to give them a slice of the Kazakh-Indian oil pipeline.

So for the interim, it would seem best if India and Kazakhstan expanded their nuclear cooperation.

By. John C.K. Daly of Oilprice.com


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