October 09, 2007

Analysis: Iran, Pakistan energy ties bloom

Published: Oct. 8, 2007 at 6:10 PM
By DEREK SANDS
UPI Energy Correspondent'

WASHINGTON, Oct. 8 (UPI) -- The approval of a $60 million electric line between Iran and Pakistan reflects a regional trend toward electrical grid interconnection, but its path through the unstable Baluchistan region of Iran and Pakistan also highlights the troubles facing energy cooperation between the two countries, as well as the difficulty in protecting a proposed $7.5 billion scheme to send natural gas from Iran to India via Pakistan.

In late September, Tehran and Islamabad made another step toward building a 220 volt power line between Iran and Gwadar in Pakistan. The estimated $60 million cost of building the transmission line will be borne by both countries and will supply Pakistan with 100 megawatts of electricity from Iran.

Pakistan's growth over the past several years has led to an explosion in electricity demand. According to the data arm of the U.S. Department of Energy, the Energy Information Administration, Pakistan will have to increase its electricity generation capacity by 50 percent between 2006 and 2010 to keep up with demand. The country currently operates two nuclear reactors that supply 2 percent of its electricity needs.

While the project has been in planning since early this year, its 100 km path leads through one of the most lawless parts of Iran, rife with banditry and drug smuggling. The region is also home to Iran's largest Sunni population, a population that feels oppressed by the Shiite majority. On Oct. 2 an Islamic cleric was murdered in the region, and attacks on government security forces in the area are common.

In July, 11 members of the Revolutionary Guard were killed in an ambush, by what were then described as smugglers, in the Baluchistan region. The exact motivation for attacks on security forces in the area is often unclear because smugglers are also involved in rebel groups on both sides of the Iran-Pakistan border.

These attacks and general unrest are also a concern for the planned, but controversial, Iran-Pakistan-India natural gas pipeline. The 1,700 km pipeline could potentially export 150 million cubic meters of natural gas to Pakistan and India per day. India is quickly becoming one of the world's top energy consumers. In 2005 it was the world's fifth-largest consumer of oil, according to the EIA.

India has been reluctant to commit to the pipeline, which has been discussed for almost 20 years, but details of the Iran-to-Pakistan section of the pipeline will likely be concluded in a mid-October meeting, the local press in Iran and Pakistan have reported.

Faced with long-term sanctions from the United States and an increasingly hostile Europe, Iran, which holds the world's second-largest traditional oil reserves, is reaching out to its neighbors to exploit its natural gas and oil resources.

At the beginning of October Iran and Pakistan announced they would cooperate on the construction of a large refinery on the coast of Pakistan. With a refinery shortage in the country, Iran has been looking abroad for refining capacity.

Tehran is also hoping to cooperate with Ankara to pipe natural gas to Eastern Europe from Central Asia, a plan the United States has been widely criticized.

Washington has been at odds with Tehran for more than a quarter century. Accusing the Islamic Republic of supporting terrorist groups, as well as attempting to develop nuclear weapons, the United States has banned companies from investing more than $20 million in Iran and pursued international sanctions through the U.N. Security Council. Iran denies that it is attempting to develop a nuclear weapon.

These efforts have met with some success. In the past year the Security Council passed two sets of sanctions against Iranian arms sales and against individuals involved in the country's nuclear program. Europe, most notably France, has also taken a more severe stance toward Iran, pressuring French companies to stop new investment in Iran and invoking harsher rhetoric about Tehran's nuclear program.

Iran's international concerns aside, the connection of national electrical grids across borders is increasingly common. The Gulf Cooperation Council countries -- Saudi Arabia, Kuwait, Qatar, Oman, Bahrain and the United Arab Emirates -- have expressed interest in interconnection, as have Saudi Arabia and Egypt. Farther abroad, the countries that surround the Mediterranean Sea have connected their electrical grids in the Mediterranean Ring project.

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(e-mail: energy@upi.com)

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