Turkmenistan, Pakistan and Afghanistan tell CentGas to pick a new leader

Jun 11, 1999 02:00 AM

29-4-99 Pakistani, Turkmen and Afghan officials have said that they were determined to push ahead with an ambitious gas pipeline project.
At a meeting in Islamabad, representatives of all three sides signed an accord calling on CentGas, the consortium set up to build the pipeline, to start work within three months.
They also agreed to meet again in the Turkmen capital of Ashgabat for more talks in July.

The pipeline project has been on hold since last November, when Unocal, citing the need to cut costs in the Caspian region and the apparent intractability of civil conflict in Afghanistan, announced it was withdrawing from CentGas. Unocal had been appointed to head the consortium in late 1997, after the Turkmen government rejected pipeline plans submitted by Bridas of Argentina. CentGas has yet to find a replacement for Unocal, but Pakistan's Petroleum Minister Chaudhry Nisar Ali Khan said that consortium officials had been asked to choose a new leader within three months -- even if no resolution to the situation in Afghanistan was forthcoming.
The new leader of the project could be either a member of CentGas or a new partner, Khan said. He did not say how equity in the project might be divided up once a project leader was selected. Unocal had held a 54.11% stake in CentGas, and the remaining 45.89% was split between Delta of Saudi Arabia (15%), Inpex and Itochu of Japan (7.22% each), the government of Turkmenistan (7%), Hyundai Engineering and Construction of South Korea (5.54%) and Crescent Group of Pakistan (3.89%).It is not clear that any of the remaining shareholders in CentGas are able or willing to take on the project, and outside investors are likely to remain wary as long as the violent civil conflict in Afghanistan remains unresolved. Bridas still appears to be interested and, according to some reports, has begun discussions on the project with representatives of the Taleban, the hardline Islamist militia that controls most of Afghanistan.
But even if the Argentine company does take Unocal's place at the head of CentGas, financing for the project will be hard to find. Bridas' ties to the Taleban will not impress most financiers since the militia, though it controls 80% of Afghan territory, is only recognised as the legitimate government in Kabul by Pakistan, Saudi Arabia and the United Arab Emirates. And if another company is chosen to head CentGas, those same financiers are likely to repeat their warning to Unocal: that projects involving Afghanistan are too risky without a peace settlement in place.
Khan conceded that CentGas might have to alter its work plan in order to overcome such difficulties. The consortium may have to seek out unconventional sources of financing, he said, without elaborating. He also said that the project might be broken up into three components -- one for each country through which the pipeline will travel, he explained.The Afghan section of the 1,400-km pipeline would run through territory now in the hands of the Taleban. Unocal had planned to lay the pipe along a 1,400-km route from Turkmenistan's Dauletabad gas field to the Pakistani port of Multan on the Arabian Sea at a cost of about $ 1.9 billion -- or $2.4 billion if a branch line to India was also built. (Bridas, by contrast, estimated the cost of the project at about $ 2.5 billion and made no offer to extend the pipeline to India.)
The 48-inch pipeline would be capable of carrying up to 20 billion cubic meters of gas per year. Construction of the Afghan section would be the first major investment project in Afghanistan since that country was invaded by the Soviet Army in 1979.

Source: NewsBase
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