Introduction

The high economic growth of the Asian economies, particularly China, India, and Pakistan, led by increased integration in the global market, has put an end to their “self sufficiency” paradigms. The unprecedented demand for energy has unleashed a quest for securing energy resources and supplies abroad, profoundly affecting the foreign policy priorities of these countries. On the other hand, dependency on oil leaves their economies vulnerable to the volatile oil markets. The high oil prices threaten to hamper growth and increase the governments’ financial burden. In addition, the growing climate change concerns make natural gas, which is cheaper and cleaner, the “fuel of choice” and the “fuel of 21st century”.

The solution for India and Pakistan lies in their neighbourhoods. Iran has the second largest natural gas reserves in the world after Russia. Turkmenistan and the other Central Asian states also have considerable oil and gas reserves.

The most economical way to bring these untapped resources home is by pipelines. The two proposed pipelines under discussion over a decade now are the Iran-Pakistan-India (IPI) pipeline and the Turkmenistan-Afghanistan- Pakistan-India (TAPI) pipeline. However, both projects face a number of problems.

First, historically, hostile relations between Pakistan and India have not to date permitted any venture of such strategic importance. Secondly, the United States' strategic interests in the region make it difficult for the countries to pursue independent policies. Finally, the equally important issues are physical security of pipelines in violence-mired territories, pricing of gas, lack of investments and infrastructure, reliable projections of the resources and demand, and regulatory issues. Nevertheless, both pipelines have the potential to change the South Asian politico-economic landscape completely.

This chapter is organized as follows. In the second section, the broad issues of “energy security” and “geopolitics” and their interaction in the current situation of the region will be explored. The third section looks at the countries’ energy requirements and the available options, given the current global backdrop.