These three energy pipelines could shake up geopolitics

March 12, 2013
Obsession
Energy Shocks
March 12, 2013

Three of the most volatile parts of the Middle East—Iran, Iraq and Israel—are the scene of oil and gas initiatives that could shake up geopolitics there and beyond. The efforts center on three energy pipelines, at least two of which seem likely to be built.

The first is an attempt by Iran to supply Pakistan with natural gas. On March 11, Pakistani President Asif Zardari and Iranian President Mahmoud Ahmadinejad inaugurated the construction of a new section of a proposed 1,200-mile pipeline connecting the two countries. Iran claims its own section of the line is almost finished, starting from the giant South Pars natural gas field—the world’s largest—and going to the border with Pakistan. The ceremony marked the start of construction of the 485-mile Pakistani leg. Iran is offering $500 million in finance toward the estimated $1.5 billion cost of the Pakistan portion, according to the Pakistanis.

If the pipeline is successful—the longest shot of the three considering Western-led sanctions against Iran—it will provide an economic jolt for gas-starved Pakistan. If the line is extended to India, it could also help to soften India-Pakistani friction, the underlying cause of South Asian instability. It also would create a new economic belt stretching from the Middle East to the depths of the subcontinent.

The second is an Iraqi Kurdish proposal to build a 1-million-barrel-a-day oil pipeline to Turkey. If it is built, it would roil regional politics by underpinning Kurdish ambitions for nationhood stretching from Iraq to Turkey and Syria. Western oil companies with big oil deals in Kurdistan—ExxonMobil, Chevron and the UK’s Genel among them—appear to believe that such a line will materialize.

Finally, the most potentially disruptive is natural gas exports from Israel, where large volumes have been discovered in the Eastern Mediterranean Sea. Israel is beginning to seriously mull how it will transport the gas (paywall). The main options have been shipping it as liquefied natural gas, through a long pipeline to Greece, or through a pipeline to Turkey. Analysts have rejected the LNG and Greek options as too expensive, and talk now centers on Turkey.

Israel and Turkey have had tense relations since 2010, when Israeli troops stormed the Mavi Marmara, a ship that was trying to break the blockade of the Gaza Strip, and killed nine Turkish activists.

But efforts are under way to resolve the issue diplomatically. If they can, and a pipeline is built, Israel will at once change the complexion of the Levant, with warmer relations with Turkey, possibly Jordan and other neighbors. The gas could also go to Europe, further undermining Russia’s weakening hand on the continent. The exports would also be an economic boost and a confidence-builder for Israel, which has been reliant on hostile neighbors for its energy supply.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 24,316 other followers