Gas pipeline from Turkmenistan to Pakistan on the table again

Feb 19, 2002 01:00 AM

Endemic volatility in Afghanistan has long stalled Turkmenistan's plans to build a potentially lucrative gas pipeline to Pakistan. In recent weeks, however, with the demise of the Taliban, talk of a new pipeline has begun to resurface.
Turkmenistan's authoritarian President Saparmurad Niyazov has long advocated construction of a new gas export pipeline through neighbouring Afghanistan. Even Niyazov's opponents concede that such a pipeline would serve Turkmenistan's best interests.

The trans-Afghan gas pipeline from Turkmenistan to Pakistan, if realized, would surely come as a positive development, former Turkmen foreign minister and opposition leader Avdy Kuliyev said. It would contribute to regional stability as it would benefit all parties in Central Asia, said Kuliyev, who is currently based in Moscow.
An increasing number of former Turkmen officials are now based in Russia and Western Europe, lobbying for democratic changes in their native land. However, their criticism of Niyazov's dictatorial ways has fallen on deaf ears so far.
In the meantime, Niyazov is pursuing his pipeline dream. As peace is being installed in Afghanistan, it is now possible to build a pipeline to Pakistan. Niyazov met Afghanistan's interim minister of energy and water resources, Muhammad Shaker Kargar, to discuss energy cooperation.
Kargar reportedly confirmed that the interim administration supports the pipeline plans -- also in order to export Afghan gas. It has been understood that Niyazov plans to raise the pipeline issue with Afghanistan's interim leader Hamid Karzai in the near future. Niyazov held telephone talks Karzai and invited him to visit Turkmenistan.
Moreover, on February 8 Karzai announced that he and Pakistani President General Pervez Musharraf had agreed to revive a plan for a trans-Afghan gas pipeline from Turkmenistan. Karzai described the project as "very essential" and "beneficial for the entire region".

Turkmenistan has been keen to reduce its heavy reliance on pipelines belonging to Russia possibly by construction of new gas export pipelines to or through neighbouring Iran and Afghanistan. Currently, Russian pipelines are the main outlet for Turkmenistan, which is believed to hold the fourth-largest natural-gas reserves in the world and heavily depends on revenues from gas exports. Therefore Russia is well positioned to pressure Turkmenistan by restricting access to export pipelines.
In October 1997, six international companies and the government of Turkmenistan formed Central Asia Gas Pipeline (CentGas). The group was developing a project to build a 1,271 km pipeline to link Turkmenistan's abundant proven natural-gas reserves with growing markets in Pakistan. The group is also considering an extension of the line to the New Delhi area in India.
The CentGas consortium was to include, either directly or through affiliates: Unocal, 46.5 %; Delta Oil (Saudi Arabia), 15 %; the government of Turkmenistan, 7 %; Indonesia Petroleum (INPEX) (Japan), 6.5 %; Itochu Oil Exploration Co (CIECO) (Japan), 6.5 %; Hyundai Engineering & Construction (South Korea), 5 %; and the Crescent Group (Pakistan), 3.5 %.

The proposed natural-gas pipeline would stretch from the Turkmenistan-Afghanistan border in south-eastern Turkmenistan to Multan, Pakistan, with a 640 km extension to India under consideration. Estimated cost of the project is $ 1.9 bn for the segment to Pakistan and an additional $ 600 mm for the extension to India.
The proposed pipeline was to carry natural gas from the Dauletabad Field in south-eastern Turkmenistan at a rate of up to 2 bn cfpd (20 bn cmpy). The Dauletabad Field has estimated reserves of more than 700 bn cm.
It has been argued that this project could have sound economic fundamentals, given the market needs of Pakistan and India. But in August 1998 Unocal halted development of the project after US forces fired missiles at guerrilla camps in Afghanistan in the wake of bomb attacks on two US embassies in Africa.

Niyazov had long engaged the Taliban in a bid to stem cross-border instability in order to create favourable conditions for his pipeline dream. Now, with an internationally recognized government in place in Kabul, Turkmenistan is apparently renewing efforts to convince other interested parties that the project is economically feasible and should be carried out.
Moreover, Turkmenistan has taken some practical steps. On February 8, Niyazov personally inaugurated a $ 180 mm gas-compressing facility at the Dauletabad-15 gas field. Although the facility is designed to serve Turkmenistan-Russia gas pipelines, obviously the new unit could serve another pipeline as well.
According to Niyazov, the pipeline project could be the foundation for a new commerce corridor for the region, often referred to as the Silk Road of the 21st century. However, the project still faces significant economic, political and commercial challenges. For instance, finalizing mutually acceptable commercial agreements may prove tricky, while ongoing volatility in Afghanistan is likely to remain a problem.

The Taliban's demise does not necessarily imply an end of civil strife in Afghanistan, Kuliyev argues. On the other hand, Niyazov with his long record of mercurial and questionable behaviour may not prove a reliable partner in any major international project, he said. However, the current circumstances may well force Niyazov to be more submissive, Kuliyev stated.
Furthermore, conflicting international interests could also affect the pipeline project. Both Russia and Iran would like to see Turkmen gas riches flow across their respective borders, while the US and Turkey might want the Turkish port of Ceyhan to be the end-point for Turkmen oil and gas. With such a high-stakes backdrop around the pipeline plan, it could well remain on the drawing board for quite some time.

Source: Asian Times
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