Nothing exemplifies this better than two major initiatives India took recently. First, it signed up for the Turkmenistan gas pipeline after watching from the sidelines for well over a decade and resisting all inducements to join it, even the blandishments of the US. Then, within days it went out of its way to lionise Iranian President Mahmoud Ahmedinejad during a stopover in Delhi, making it appear that the hoarier Iran-Pakistan India (IPI) pipeline was back on the agenda. But only seemingly so since the government has been sending out clear signals thereafter that it considers the IPI pipeline too risky at this juncture.
Far more significant is India's decision to throw its weight behind the Turkmenistan pipeline that is plagued by a host of uncertainties, not least the adequacy of supplies. The 1,680-km line that will snake its way from the Dauletabad gas field in the central Asian country, cut across Afghanistan and Pakistan, taking in Herat, Kandahar and Multan before reaching Fazilka on the Indian border. Called TAPI as an acronym for the names of the countries it crisscrosses, this pipeline is better known in the West as the Trans Afghan Pipeline because close to half its length (830 km) lies in war-torn Afghanistan; just 170 km of this audacious venture will lie in Turkmenistan.
This is undoubtedly a pipeline that will call for more than the usual guts demanded of those who play the Great Game. TAPI, much more than IPI, straddles the most volatile region in the world. About 47,000 troops, primarily US and British, are fighting the Taliban forces in Afghanistan where an increasing number of suicide bombings have added to the mayhem. The latest reports say the US intends to increase its troops and firepower in the embattled country.
It was surprising, therefore, that Delhi plumped for the TAPI project with very little discussion on its merits. Announcing the agreement, Minister of State for Petroleum and Natural Gas Dinsha Patel gave some sketchy details of what India expects to gain from the $ 7.6 billion pipeline -- still an estimate -- that is expected to bring gas to India from 2014. Patel says TAPI is projected to supply 90 mmscmd (million standard cubic meters daily) of gas, of which Afghanistan will get 5 mmscmd during the first two years and 14 mmscmd from the third year onwards. The rest is to be shared equally between Pakistan and India. That's roughly around 30 billion cubic meters (bcm) of gas annually.
The agreement came three weeks after the ministry signed a memorandum of understanding with its Turkmenistan counterpart in Ashgabat during the visit of Vice President Hamid Ansari to Turkmenistan in April. According to one view, it was an indication that India was ready to take the plunge on an alternative to the IPI pipeline, while petroleum ministry sources say it is not a case of either/or but a question of widening the options.
What then are the misgivings on TAPI? Turkmenistan is one of the great repositories of natural gas with an estimated of 10-14 trillion cubic meters (tcm) of reserves. But the reserves are not certified and it was only in January that the country's new President Gurbanguly Berdymukhamedov, who has been pushing gas projects with much vigour since he took over six months ago, sought an independent audit from a British firm.
Under discussion since 1995, the project has seen a lot of it original backers like the US major Unocal and Russia's Gazprom pull out although the US government and the Asian Development Bank are pushing for it. Of late, Turkmenistan has been involved in a flurry of deals that put a huge question mark over supplies to the Afghan pipeline. Russia has a virtual monopoly over exports from Turkmenistan with Gazprom allowed to take up to 50 bcm of gas annually for another two decades.
China has been promised 30 bcm from 2009 and Iran 8 bcm. Berdymukhamedov is also reported to have signed another 10 bcm to the European Union, bringing its projected gas exports to over 100bcm annually. That, say energy analysts, is a huge figure considering that Turkmenistan's reserves are yet to be certified.
India's petroleum ministry has no clear idea of Turkmenistan's potential but points out that gas exports are expected to begin only in 2014 before which a realistic assessment will emerge. That's fair enough since the energy game is all about tying up potential supplies before the competition does. In this case, China has once again beaten India to the draw since Turkmenistan supplies are scheduled to start next year.
There are several reasons why India needs to play the Turkmenistan card with circumspection and a great deal of diplomatic finesse. For one, it has to be careful of the sensitivities of Russia which is a strategic partner on nuclear energy and oil.
Moscow is determined to discourage others from tapping into Turkmenistan gas and has been regularly raising doubts about the country's claims on its reserves. If there are indeed enough supplies, Russia would like, as far as possible, to control the market. For another, it could find itself trapped into a costly deal since Turkmenistan's objective in striking new export deals is to secure a more remunerative price for its gas which is sold at very low rates to Russia.
Russia has also been a strong supporter of the IPI pipeline and is not likely to view with favour India opting for TAPI in preference to IPI. From all accounts, the latter has been slotted as high-risk by India because of the potential threat of the US attacking Iran. There is also the question of unrest in Baluchistan where existing pipelines have been blown up by tribal insurgents.
Commercial reasons are ostensibly the major stumbling block on the IPI pipeline with India and Pakistan still squabbling over the transit fee. India is asking Pakistan to lower the transit fee to 15 cents per million British thermal units (mmBtu) from the 42 cents it is demanding in addition to a flat payment of $200 million a year that Pakistan is seeking for the security and maintenance of the pipeline.
While India blows hot and cold on the project, Iran and Pakistan are set to meet next week for talks to finalise the signing of the gas sales purchase agreement although analysts fear this could be delayed owing to the political uncertainty in the wake of the resignation of Petroleum Minister Khawaja Asif. As such, the problems of coalition politics in Pakistan might give India breathing space on the pipeline.
For India, it is a choice between a rock and a hard place. Both pipelines traverse some of the most hazardous combat zones with little hope of governments being able to provide foolproof guarantees of secure supplies. But with gas supplies falling far short of demand and leaving significant power and fertiliser assets stranded for the past three years, it clearly has to take a gamble and hope that its choice will pay off. Will the IPI pipeline prove less risky than the TAPI line? A decision on Iran by the White House along with events unfolding in Afghanistan and Pakistan could soon settle the debate.