Securing Energy in Southwest Asia
Writing for The News International, Board Member Ikram Seghal and others report on EWI’s Islamabad conference "Afghanistan Reconnected: Linking Energy Suppliers to Consumers in Asia."
According to the "Global Economic Prospects"report, South Asian regional growth declined from 7.4 percent in 2011 to an estimated 5.4 percent in 2012, mainly due to a sharp slowdown in India. Home to many of the developing world’s poor, the economic future of the region depends upon regional cooperation bringing about the Asian Century, supporting regional networks to promote cooperation and focusing on trade in goods, services, electricity, people-to-people contact, and cooperation in water resource management.
To give impetus to the key challenges facing the regional countries in having access to adequate, reliable and affordable energy, the EastWest Institute (EWI) organized a conference in Islamabad from September 2 to September 4. Representatives of regional governments, parliaments and the private sector as well as experts from China, the U.S. and Europe gathered with the aim to identify productive opportunities for economic growth based on Afghanistan’s potential as a transit route for energy supplies from Central Asia to energy markets in South Asia.
Ambassador Beate Maeder-Metcalf, regional director of the EWI Brussels, set the tone for the conference emphasising the EWI’s determination to hold the "Abu Dhabi Process" consultations in Pakistan despite the security situation. Federal Minister for Petroleum and Natural Resources Khaqan Abbasi underlined the importance of securing energy, giving details of Pakistan’s own resources and those available in the adjoining region.
The federal minister was very positive about the outcome of the conference. Chief Minister Punjab Shahbaz Sharif was meant to be the keynote speaker but had to cancel without notice, most unfortunate given that energy is a key factor in his plans and the participants were looking forward to an interaction with the CM.
Energy transit routes are of crucial importance for the mutual benefit of both exporting and importing states. Analysts cautioned about barriers in using Afghanistan as an energy route, the civil war and political instability making possible routes insecure. Not only a historical but a natural trade corridor, it has a great potential for economic growth.
Energy is of fundamental importance to any country. Private sector involvement in energy trade can mitigate the risk on non-recovery of cost of import. South Asia encompasses one-fifth of the global population, and energy trade can be an influential tool for economic integration. Three most important projects in this sector are the Iran-Pakistan gas pipeline (IP), the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (Tapi) and Central Asia South Asia (CASA)-1000. These projects will benefit Central Asian republics by providing them with new markets.
Although Sartaj Aziz had to leave for Karachi in a hurry, he nevertheless made it a point to attend the concluding session. He emphasised good relations with all the neighbours and said intra- and inter-regional energy trade would help overcome the energy demand and supply gap in the region and economically stabilise the region. Political disturbances and civil war can be a setback to development as in the case of Tapi, but its construction will certainly be undertaken once the situation gets better.
Dr. Frederick Starr from Johns Hopkins University was thrilled at Pakistan’s determination to go ahead with Tapi. One of the early proponents of the Tapi pipeline, Dr. Starr said, “Obviously, serious challenges will remain, the greatest of which will be to design the project (Tapi) so that it is viable in free-market terms. Doubts abound, but there are now sober optimists as well.”
The environment-friendly nature of renewable energy compels people to focus on unconventional and reliable energy sources other than oil and gas. To overcome the hindrances to socio-economic growth, Pakistan must look into the potentiality of solar, wind, bio-fuel, and hydro power as renewable resources.
Given the disadvantages of burning fossil fuels, renewable energy has become the need of the time. As a result of the political nature of hydel energy Pakistan is forced to import large quantities of oil and oil products. Even then many cities have to undergo severe loadshedding for more than 12 hours a day. This increases trade deficit, high inflation, unemployment, depreciation of rupee, and mainly leads to lowering of living standards. The gap between demand and supply is increasing by the day despite the fact that there is tremendous potential of renewable energy sources in Pakistan.
Discussing "Central Asia Energy Resources and Potential for Trade," speakers talked of Central Asia becoming one of the world’s top five oil producers within the next decade. Ranked 15th in the world for proven gas reserves, Kazakhstan has become a net exporter of natural gas in 2009.
Uzbekistan is planning a major expansion of its domestic electricity infrastructure. It plans to raise $3.5bn between 2009 and 2014 to finance the increased capacity by around 2,700MW. Turkmenistan holds the world’s fourth largest reserves of natural gas amounting to 7.504 trillion cubic meters. Kyrgyzstan and Tajikistan are less attractive to investors in terms of fossil fuel reserves.
An expert panel focused on "Afghanistan as Energy Importer and Producer," the country being critical to developing inter-regional cooperation. Despite many differences, Pakistan and Afghanistan are moving towards joint management of common rivers starting with the proposed construction of a 1500MW hydropower project on the Kunar River.
The panel on "Towards Regional Cooperation for Energy Security" focused on the increasing realization within South Asian countries about the importance of regional cooperation in the area of energy. There is talk of India providing electricity to Pakistan. In the field of energy security, China is cooperating with Turkmenistan in the construction of the gas pipeline opened in 2009.
Pakistan’s primary power supplies from conventional energy sources cannot meet the country’s demand. Electricity generation has become dependent largely on petroleum fuels and faces a huge gap of 4500MW between demand and supply that has far-reaching consequences on development. For this reason, renewable energy alternatives must be developed urgently.
Despite the enormous potential of indigenous energy resources, Pakistan remains energy deficient, relying heavily on the imports of petroleum products to satisfy its present needs. A recent study by the Energy Information Administration based on a study done by Advance Resources International (ARI) has estimated Pakistan’s recoverable shale gas at 105 trillion cubic feet (tcf)—up from 24 tcf. Oil estimate have increased dramatically 30 times from 300 million barrels to 9.1 billion barrels. In contrast, India is estimated to have 96 tcf and 2.7 billion barrels of oil recoverable from share oil reserves.
The EWI initiative to have its energy conference in Pakistan despite the critical security situation here has highlighted the need of the country. Energy is crucial not only to meet socio-economic challenges, but the inter-dependability inherent in the acquisition process will further the cause of peace in the region.
Ikram Sehgal is a security analyst and chairman of PATHFINDER GROUP.
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