The Baloch Insurgency and its Threat to Pakistan's Energy Sector

www.jamestown.org/news_details.php

03/21/2006 - By John C.K. Daly (from Terrorism Focus, March 21) - While most of the world's media remains focused on insurgent attacks on oil facilities in Iraq and Saudi Arabia, Pakistan is experiencing a rising tide of violence against its Sui natural gas installations located in the country's volatile Balochistan province, where the majority of the energy-starved country's natural gas facilities are located. Pakistan, currently engaged in a drawn-out conflict against al-Qaeda and Taliban remnants in its North-West Frontier Province (NWFP), is slowly descending into conflict with anti-government forces in Balochistan province, raising the unsettling prospect of a rising second internal front against militants. A second internal front would drain resources from Pakistan's ability to maintain control over the country and its campaign against al-Qaeda and Taliban remnants in the NWFP and the Federally Administrated Tribal Areas (FATA).

Balochistan contains 42 percent of Pakistan's total land mass and is the largest of the country's four provinces. The province is strategically vital as it borders Iran, Pakistan, FATA and the Arabian Sea. The capital Quetta lies near the border with Afghanistan and has road connections to Kandahar to the northwest.

Islamabad also sees the province as essential to its future prosperity, building a $1.1 billion deepwater commercial and naval port at Gwadar on the Arabian Sea. China contributed about $200 million toward the construction cost of Gwadar's first phase, which was completed in April 2004. Chinese interest extends far beyond Gwadar; during a recent interview, Pakistani Minister of State for Investment Umar Ahmad Ghumman said that the two countries had discussed $12 billion in investment projects of interest to China including a 60,000 barrels per day oil refinery at Gwadar (Aaj TV interview, March 6).

India is also interested in Balochistan province as a transit point for a projected $4.5 billion Iran-India natural gas pipeline expected to be operational by 2010. India also discussed with Pakistan plans by both countries to import gas from Turkmenistan via Afghanistan and from Qatar (balochistan.org, March 4).

Balochistan's natural gas production is critical to Pakistan's economy. The Sui natural gas field in Balochistan's Bugti tribal area produces approximately 45 percent of the country's total gas production, with Pakistan Petroleum Ltd. producing 720-750 million cubic feet of gas daily from more than 80 wells in the field (Business Recorder, July 30, 2004). Other natural gas fields in the province include Uch, Pirkoh, Loti, Gundran and Zarghoon near Quetta. A provincial spokesman said that Balochistan has 19 trillion cubic feet of natural gas reserves and six trillion barrels of oil reserves on- and off-shore (Business Recorder, May 14, 2004).

Despite the province's wealth of natural resources, Balochistan is Pakistan's poorest province, with 45 percent of the population living below the poverty line. There is rising resentment in the province that despite the fact that its natural gas generates $1.4 billion annually in revenue, the government remits only $116 million in royalties back to the province (Dawn, February 6).

After the U.S. campaign against the Taliban began in November 2001, Balochistan became a critical escape route for al-Qaeda and International Islamic Front refugees attempting to flee via Karachi to Yemen. After U.S. operations against Iraq began in March 2003, Balochistan became an increasingly important theater of operations for al-Qaeda and International Islamic Front guerrillas in their efforts to attack U.S. economic interests in Pakistan in retaliation for the U.S. campaigns in both Afghanistan and Iraq (South Asia Analysis Group, January 24, 2003).

Attacks on Pipelines

In 2003, resentment among Baloch chiefs boiled over into intermittent armed conflict with the Pakistani Army. By July 2004 the rising violence in Balochistan forced a U.S. company involved in offshore drilling to abandon its two test wells between Gwadar and Pasni because of security concerns for a loss of nearly 26 million dollars (Business Recorder, July 30, 2004).

On January 18, 2005, a major attack disrupted Sui's output. In the aftermath of the attack, the government rushed hundreds of troops to the area. At least eight people died in the violence, which caused a production loss of more than 43,000 tons of urea and caused a daily electricity shortfall of about 470 megawatts (BBC, January 18, 2005).

Balochistan's turbulent year of 2005 ended with an attack on the head of state. On December 14, Balochistan Liberation Army militants launched six rockets, three of them landing near a paramilitary camp in Kohlu that Pakistani President Pervez Musharraf was visiting 135 miles east of Quetta. Islamabad described the attack as an assassination attempt and three days later launched a full-fledged army operation in Kohlu district's Marri-Bugti areas against local "miscreants" and "saboteurs."

Since the beginning of the year, militants have launched at least a dozen attacks on oil pipelines in the region. The militant tribal Balochistan Liberation Army has claimed responsibility for the attacks. Some analysts believe that Taliban and al-Qaeda guerrillas have also been using Balochistan to move back and forth between Pakistan and southern Afghanistan (Voice of America, March 2). The year opened with heavy fighting on January 1 between security forces and tribesmen on the Dera Bugti-Sui Road, while four people were killed and three others injured when a bomb exploded in a house in the Kharan district. Jamhoori Watan Party's secretary-general Agha Shahid Hasan Bugti accused the security forces of opening fire on tribesmen without any provocation (Dawn, January 1). Policeman Sher Ahmed was injured when he attempted to deactivate a rocket that was found in Killi Shiekhan as six bombs blew up between Sibi and Harnai, one near a natural gas pipeline in Kalat. Fighting continued into the next day.

District Coordination Officer Dera Bugti Abdul Samad Lasi accused the tribesmen of launching rockets at the Loti gas field and accused Nawab Akbar Bugti's men of attempting to capture the Sui gas installations. Sui Northern Gas Pipelines Ltd. subsequently halted natural gas supplies to 118 power plants in Lahore-Sheikhupura, Bhai Phero and Gujranwala regions, forcing textile mills to halt their operations for an indefinite period. A Sui Northern Gas Pipelines Ltd. official claimed that the shutoff was because of adverse weather conditions.

On January 15, Jamhoori Watan Party chief Nawab Akbar Khan Bugti told an audience at the Karachi Press Club's Meet the Press program by telephone that the Pakistani government is committing "genocide" in Balochistan, adding, "As a war has been imposed on Baloch people, they have every right to defend themselves against the onslaught by the government forces" (Dawn, January 15).

The ongoing military operations in Balochistan were now beginning to worry Pakistan's business community. On January 16, the corporate brokerage house Taurus Securities issued its "Key risks and challenges 2006" report, which observed that the ongoing violence in Balochistan will have "a detrimental impact on the reserves of natural resources and disrupt gas supplies," adding that the military operations were worsening the situation (www.taurus.com.pk, January 16). On a political level, the report noted that the military campaign was providing common ground for opposition parties to unite and increasing unrest in other provinces.

Attacks also spread beyond Sui. Even as tribesmen clashed with the military on January 29, two separate attacks on natural gas pipelines supplying the power station at Uch in Nasirabad and a gas purification plant at Loti disrupted production at both facilities (Dawn, January 29). Militants also attacked the Pirkoh gas field. The saboteurs managed to destroy a significant portion of the Uch facility's 24-inch pipeline, setting it ablaze. A spokesman said, "The 586 mw-capacity power plant owned by British and U.S. companies was closed at about 11 p.m." Repairs took several days. The Uch attack certainly caught U.S. investors' intention as a threat to U.S. economic interests.

Even as Bugti remained in hiding, Baloch political leaders demanded increased revenue from the province's natural gas facilities. On March 4, National Party parliamentary leader and Balochistan Assembly opposition head Kachkol Ali demanded royalties from the proposed Iran-Pakistan-India gas pipeline project, which would transit Balochistan, citing international law (balochistan.org, March 4).

Certainly, Musharraf shows no sign of avoiding a showdown. Speaking to reporters on March 12, he said that his government will not give in to the "blackmail" of "a handful of miscreants" in Balochistan and will use force to defeat them, adding that he was confident that the situation would improve in a month while force would be used against Baloch militants who have attacked security forces and the province's natural gas infrastructure (Daily Times, March 12).

On March 13, U.S. Energy Secretary Samuel Bodman visited Pakistan to inaugurate a bilateral Enhanced Energy Cooperation program. Bodman made a profound statement completely overlooked in the U.S. media, saying, "The security situation in Pakistan needs to be improved as it is an impediment to investment. Until there is an improvement, substantial foreign investment is not possible" (Daily Times, March 16).

Conclusion

While it seems that al-Qaeda and the Taliban remain focused on their campaign against ISAF and U.S. forces in Afghanistan's eastern provinces and Pakistani Army units in the NWFP, the possibility exists that they could move southeastwards to take advantage of Balochistan's growing unrest, linking up with militants operating out of Karachi. The fact that Musharraf has deployed 40,000 troops to Balochistan, about half the 70,000 currently engaged in the NWFP, indicates that he still believes the problems there to be "containable." If the pressure on Islamist militants in the NWFP becomes too severe, then the distinct possibility exists that rather than face the hammer of ISAF troops in Afghanistan, they could migrate to Balochistan and pressure the Musharraf government by threatening the infrastructure there.

An escalating conflict in Balochistan can only drain resources from Pakistan's war on terrorism on its border with Afghanistan and frighten the foreign investment community away from the province, which will be a key player in Pakistan's future prosperity and stability. Should Baloch militants apply the lessons learned in Iraq and more recently in Saudi Arabia about attacking the national energy infrastructure and target the Sui gas fields in a concerted manner, then not only would Musharraf's government lose foreign investment, but it would also face the nasty possibility of industrial production plummeting and nearly half of the country's natural gas consumers placing the blame squarely on Islamabad's iron-fisted tactics.

Posted By: Jamestown