NEW DELHI: India and Pakistan said Wednesday they were closer to an agreement on a pipeline to import gas from Turkmenistan that would signal a further warming of economic ties between the traditional rivals. Turkmenistan has the world’s fourth-largest gas reserves and energy-hungry India and Pakistan are both eager to tap this source through the [...]

As Reported By Reuters

President Barack Obama signed a sweeping US defense funding bill on Saturday which includes new sanctions on financial institutions dealing with Iran’s central bank, and curtailing up to $850 million in aid to Pakistan. The bill was signed despite concerns about sections that expand the US military’s authority over terrorism suspects and limit his powers in foreign affairs.

The massive defense bill Congress passed on earlier in December freezes 60 per cent of the $850 million aid, or $510 million, until the US defense secretary provides lawmakers with assurances that Pakistan is working to counter improvised explosive devices (IEDs). US lawmakers say that many Afghan bombs that kill US troops are made with fertilizer smuggled by militants across the border from Pakistan into Afghanistan.

“The fact that I support this bill as a whole does not mean I agree with everything in it,” Obama said in a statement, citing limits on transferring detainees from the US base at Guantanamo Bay, Cuba, and requirements he notify Congress before sharing some defense missile information with Russia as problematic.

The bill, approved by Congress last week after its language was revised, aims with its Iran sanctions to reduce Tehran’s oil revenues but gives the US president powers to waive penalties as required. Senior US officials said Washington was engaging with its foreign partners to ensure the sanctions can work without harming global energy markets, and stressed the US strategy for engaging with Iran was unchanged by the bill.

The bill may also prove problematic for Pakistan in ways other than providing assurances of concrete steps to counter the manufacture of IEDs. The sanctions placed on dealing with Iran’s central banks may weigh on Pakistan’s plans for the Iran-Pakistan pipeline which aims to provide gas to Pakistan.

Pakistan needs the gas supplies from Iran to augment its own gas reserves which have been shrinking fast, leading to widespread gas shortages affecting its industry and daily life.

Filed under: Afghanistan, Iran, Pakistan, Pakistan Army, Pakistanis, President Obama, United States, US Army, US-Pakistan Relations Tagged: Afghanistan, Iran, NATO, Pakistan, Pakistan Aid, Pakistanis for Peace, President Obama, US Aid, US Pakistan Relations

Iraq has agreed to a $17 billion deal covering the next 25 years with Royal Dutch Shell and Mitsubishi to capture the natural gas that is currently being flared off in its southern oil fields. The BBC reports “The new venture will be called Basra Gas Company, with Iraq holding a 51% stake, Royal Dutch Shell’s 44% and Mitsubishi 5%.” Right now, 700 million cubic feet a day are flared, a huge waste due to a lack of infrastructure. Natural gas is commonly burned off in this way as a safety precaution to relieve pressure that might otherwise damage an oil facility.

A memorandum of understanding was inked in September 2008, but some lawmakers demanded parliament OK the arrangement, and in Basra, officials thought their province got short changed. Back-room bargaining seems to have solved the problems. Most of the gas will be burned to generate electricity locally; despite the billions spent on the electrical grid in Iraq, the country still suffers from power shortages.

Iraq’s Oil Minister, Abdul-Karim Elaibi called the deal a “historic turn in Iraq’s oil industry.” Shell CEO Peter Voser told the press Iraq has become a “…substantial part of Royal Dutch Shell’s portfolio in the Middle East.”

To get an idea of how much this is, we can convert it to its oil equivalent. Natural gas is converted to barrels of oil equivalent using a ratio of 5,487 cubic feet of natural gas per one barrel of crude oil. So, 1 million cubic feet of natural gas amounts to 172.3 barrels of crude oil equivalent. Multiply that by 700 and the result is 120,610 barrels of crude oil equivalent daily or 44,022,650 crude oil equivalent per year.

Sinan Salaheddin of the Associated Press wrote recently, “Iraq burns off almost half of the 1.5 billion cubic feet per day of gas that it produces. The deal will help the country capture more than 700 million cubic feet per day of gas from three fields. They are the 17.8 billion-barrel Rumaila field being developed by a BP-CNPC consortium, the 4.1 billion barrel Zubair field, handled by an Eni-led consortium and partners Occidental Petroleum Corp. and KOGAS, as well as the 8.6 billion barrel West Qurna Stage 1, which is being developed by ExxonMobil-Shell consortium.”

The deal is Shell’s third in Iraq since the 2003 US-led invasion, and it will bolster the company’s presence in a country which sits atop 143.1 billion barrels of crude oil and 126.7 trillion cubic feet of gas reserves. It lacks the infrastructure, however, to exploit this as it might.

I recently came across two worthwhile pieces on Persian Gulf states punching above their weight. The first is a New York Times analysis of Qatar, the lil’ oil rich country that could:

Qatar is smaller than Connecticut, and its native population, at 225,000, wouldn’t fill Cairo’s bigger neighborhoods. But for a country that inspires equal parts irritation and admiration, here is its résumé, so far, in the Arab revolts: It has proved decisive in isolating Syria’s leader, helped topple Libya’s, offered itself as a mediator in Yemen and counts Tunisia’s most powerful figure as a friend.

This thumb-shaped spit of sand on the Persian Gulf has emerged as the most dynamic Arab country in the tumult realigning the region. Its intentions remain murky to its neighbors and even allies — some say Qatar has a Napoleon complex, others say it has an Islamist agenda. But its clout is a lesson in what can be gained with some of the world’s largest gas reserves, the region’s most influential news network in Al Jazeera, an array of contacts (many with an Islamist bent), and policy-making in an absolute monarchy vested in the hands of one man, its emir, Sheik Hamad bin Khalifa al-Thani.

Qatar has become a vital counterpoint in an Arab world where traditional powers are roiled by revolution, ossified by aging leaderships, or still reeling from civil war, and where the United States is increasingly viewed as a power in decline.

The next one is about the big boy of the Gulf, Saudia Arabia, and it comes from the Washington Post’s David Ignatius, who sees the House of Saud filling a power gap left by a ‘declining’ United States:

The more-assertive Saudi role has been clear in its open support for the ouster of Syrian President Bashar al-Assad, who is Iran’s crucial Arab ally. The Saudis were decisive backers of last weekend’s Arab League decision to suspend Syria‘s membership (though they also supported the organization’s waffling decision on Wednesday to send another mediation team to Damascus).

Money is always the Saudis’ biggest resource, and they are planning to spend it more aggressively as a regional power broker — roughly double their armed forces over the next 10 years and spend at least $15 billion annually to support countries weakened economically by this year’s turmoil.

Saudi sources provided an unofficial summary of the defense buildup. The army will add 125,000 to its estimated current force of 150,000; the national guard will grow by 125,000 from an estimated 100,000; the navy will spend more than $30 billion buying new ships and sea-skimming missiles; the air force will add 450 to 500 planes; and the Ministry of Interior is boosting its police and special forces by about 60,000. The Saudis are also developing their own version of the U.S. Joint Special Operations Command.

There’s a lot of talk about an American pivot to the Pacific and East Asia, and rightly so, but the Middle East has a way of drawing you back in. In the recent actions and strategic maneuvers of Saudi Arabia and Qatar we can see why.