Trans-Sahara Gas Pipeline Project-Politics of Pipelines Crossing Borders

2010-04-18
THE GUARDIAN Newspaper- Idowu Oyebanjo

THE Trans-Sahara Gas Pipeline Project is aimed at carrying gas from Nigeria through Niger and Algeria to Europe. While it is important to earn foreign exchange from the hitherto flared gas produced for many years from the Nigerian oil fields, we cannot underestimate what could happen when pipelines cross borders between states and nations in view of the economic and socio-political diversities of the different countries involved.

In view of the fact that much capital was invested in the construction the pipelines before the commissioning of the installation, one expects that measures that would ensure smooth take off of its design and operation would have been put in place. The operators of the pipeline systems are thus expected to have legal frameworks that would govern routine business transactions so that in the event of a disagreement, some tractable recourse to law and arbitration will be available. What does history tell us about problems that may arise from pipeline crossing borders?


Transit Problems

FOR a pipeline to cross from one country to another, it may suffice to give thoughts to the transit fee chargeable by the host country in addition to the fact that the host country, in some cases will propose to lift some of the fuel crossing its territory at some preferential rate. To this end, when pipelines cross borders as in this case, it could become part of the fabric of regional or even international conflict of significant proportions. No doubt, much depends on the relationship between the countries involved. However, when political passions are inflamed or geopolitical calculations take precedence, existing agreements may soon become no more than a constantly shifting reality.

Hence, the political climate between parties becomes an important factor. For example, in the Middle East, none of the great trans-national pipelines constructed in the last century is functioning today. The Trans-Arabian pipeline code named "Tapline" was constructed to run from the Arabian oil fields, through Jordan and Syria en-route the Mediterranean coast. It was meant to be a shorter and cheaper route compared to the tankers used then along the Arabian Peninsula. By 1975, the endless increase in transit fees by Syria soon marred the economic viability and therefore the continuous operation of the pipeline system. A similar pipeline network constructed by Iraq Petroleum Company (IPC) from the Iraqi oil fields to the Mediterranean coast enjoyed similar fate from Syria. Needless to say, the operations of the Iraq Petroleum Company pipelines and the Trans-Arabian pipelines were repeatedly disrupted by the Syrians, who stood to benefit from the squabbles by many hundreds of millions of dollars through combined packages of "off take" rights, preferential tariffs and transit fees. In reaction, Saddam Hussein, the then Iraqi leader, built alternative, longer and more expensive networks of pipelines through Turkey and Saudi Arabia to the international market. This gave Syria an unfortunate reputation of a mere transit state that could easily be avoided with the attendant political tension that came with it. But in 1990, Saudi Arabia confiscated Iraqi pipeline network through its territory following the invasion of Kuwait by Iraq while the Kirkuk-Ceyhan pipeline on the Turkish Mediterranean coast currently operates at an extremely reduced capacity following the damage by US bombing during the invasion of Iraq in 2003.



Regional Instability In Member States

CAREFUL consideration must also be given to the possibility of the dissolution of the member states of a nation along ethnic or political lines or cessation of a part thereof. In the case of the former Soviet Union, early after world war two, Soviet engineers constructed the largest integrated pipeline system in existence. This network supplied crude oil to all the Soviet Republics as well as providing about 100million tonnes of crude supplies to Europe. In building this system however, little regard was paid to the internal rancour between the individual Soviet Republics. After the dissolution of the Soviet Union, each of the new republics laid claim to the pipelines passing through its territory. As a result, international boundaries were erected in the paths of these oil and gas pipelines many years after the systems had been completed. This has led to the unsavoury outcome that Russia's gas and oil export to the west now cross into the territories of Ukraine and Belarus. This new configuration has led to endless squabbles over transit fees, fuel prices, interference in energy transmission and politically motivated blackmails. The recent Russia-Ukraine confrontation is a fall out of this, leading to an interruption of Europe-bound supplies for about three weeks in the middle of winter.


Technical Monopoly By A Member Nation

IT is possible by virtue of location on the path of the pipeline network, for a nation to enjoy a monopoly as a transit country and therefore exploit the situation in the face of competing supplies of products from others with hers. For example, Russia acts as the transit country for hydrocarbon resources from Turkmenistan and Kazakhstan to get through to the west. As the production cost is far cheaper from these regions, Russia has since aimed at drawing maximum benefit from her role as the transit country by carefully maintaining a near monopoly over purchases of the cheaper products from these regions while exporting her own product at higher costs to Europe. Russia's Gazprom has used the Turkmen's gas to support low domestic gas prices-vastly underpaying Turkmenistan for long periods while exporting her own natural gas to Europe at prices which are far higher than those paid to Turkmenistan. For Europeans, these have tripled since 2001.

In Kazakhstan, the Caspian Pipeline Consortium (CPC) oil pipeline is the only major direct outlet from the Chevron operated Tengiz field to the sea. Hence, the CPC and the regional government have been charging exorbitant fees for ferrying Kazakh oil loading to tankers at a nearby terminal on the Black sea coast.

Russian, however, insisted that the 28 million tonnes per year be directed through Moscow. This has paid off handsomely and the control element has worked effectively. Not only did Russian efforts delay the construction of the pipeline when oil prices were low in the 1990s, they have also blocked the expansion of the pipeline to its eventual design capacity of 67 million tonnes. Thus, both Kazakhstan and Turkmenistan have learnt the cardinal rule of energy transmission, which is valid for producers and consumers alike: the necessity to maintain alternative transmission routes.

Suffice it is to mention that the more recently constructed Baku-Tblisi-Ceyhan oil pipeline and the Baku-Tblisi-Erzurum gas pipeline, which by-pass Russia, provide such alternative routes. This development has however been described as "politically unacceptable" by the Russian Government.


Local Content

IN the operation of a trans-national gas pipeline of this nature, careful thoughts need to be given to the aspirations of the locals. Experience has shown that where multinational oil and gas companies from the west operate carelessly and pollute their environment, poor locals, who mostly benefit a little portion of the proceeds from the central government in their country, resort to vandalism of oil facilities to express their displeasure.

Hence, not all pipeline problems arise from inter-state rivalries. For example, in the north-eastern state of Assam in India, separatist forces regularly blow up regional oil pipelines.

Also, in neighbouring Pakistan, Balochistans show their displeasure at government policies by regularly blowing up gas pipelines. The guerrilla-style attacks on oil and gas installations in the Niger-Delta region of Nigeria today is a further testimony to what could happen if locals of oil regions are neglected, or when oil companies and government pay little or no attention the sustainability of their environment.

Such locals, worldwide, have argued that the central governments give too little to the regions in return for exploiting their resources. By disrupting pipeline operations, insurgents have been able to deprive central governments of large amount of income that could have been used for the development of the areas.


International Politics And Power Play


IT is imperative to state that international politics must also be considered as colonial masters tend to still exercise some control over their former colonies. Also, powerful nations may influence decisions of parties to the trans-national pipeline network.

Consider the case of the political tension between Iran and the USA. Iran, a country with second largest gas reserve, wanted to sell gas to the South Asian subcontinent. While constructing the Iran-Pakistan-India gas pipeline is economically attractive, overcoming the diplomatic resistance of the US has proved daunting. India has therefore exploited the rancour to derive enormous benefits in delaying the project as the US is offering nuclear fuels as an alternative source of energy to lure India away from it.


Border Monitoring And Control

NEEDLESS to say, in retaliation to what is perceived to be the over domineering of the west, terrorist groups may capitalise on the fact that most borders in the developing nations are not properly monitored to unleash attacks that will prevent gas fuel from reaching its destination.

The conclusion of is that pipelines play a crucial role in transporting fuel across regional and national boundaries. But some pipelines could be entangled in geo-political intrigues and machinations.

 

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