Massive Central Asia gas project moves ahead

Sep 05, 2002 02:00 AM

After decades of geopolitical rivalry, corporate intrigue, false starts and dashed hopes, a massive project which could bring unprecedented wealth to Turkmenistan, Afghanistan and Pakistan may soon become a reality. For more than 20 years, plans to build a 1,500 km, $ 2 bn gas pipeline from energy rich Turkmenistan across Afghanistan to Pakistan have been thwarted by war and the machinations of regional and global powers.
But the Asian Development Bank (ADB) says despite rife insecurity in war-torn Afghanistan, the project has gathered momentum in the past six months. "We are closer to getting it started than at anytime in the past 20 years," said Marshuk Ali Shah, ADB country director in Pakistan.
"This project has the potential to transform the regional economy, bringing with it unprecedented prosperity and a stability which we haven't seen for a very long time." Estimates put gas reserves in Central Asia at some 6.7 tcm -- the vast majority in Turkmenistan.

Since the collapse of the Soviet Union, interest by Western energy companies in Turkmenistan has been likened to the Middle East oil rush of the 1920s. In the early 1990s 24 companies from 13 countries signed energy contracts in the region. But there has been little cash flow because of continuing problems in transporting the gas from largely land-locked Turkmenistan.
Energy companies braved the post-Soviet occupation civil war in Afghanistan and set up offices in Kabul in the early to mid 1990s, entering into negotiations with brawling warlords and the Taliban before they took over the capital in 1996. The charge was led by the Unocal CentGas consortium -- which reportedly worked closely with the US State Department and Pakistan's Interservices Intelligence Agency (ISI) -- and Argentina's Bridas, the third largest oil and gas company in South America.

By the mid-1990s, the battle to win tenders for the ambitious pipeline was being described as "The New Great Game", a reference to the 19th century struggle between Russia and Britain for influence in the region. In his book “Taliban, the story of the Afghan warlords,” Ahmed Rashid said Argentina's Bridas and the Unocal competed with each other to win the backing of Taliban chiefs for building the pipeline.
But before either could secure approval both companies were forced out of Kabul by the outbreak of fighting in 1998 and US cruise missile strikes against Osama bin Laden's Al Qaeda training camps. The ousting of the Taliban late last year rekindled the hopes of oil companies and a new flurry of negotiations began.

In May, Afghan President Hamid Karzai signed a Memorandum of Understanding with his Turkmen and Pakistani counterparts to collaborate on the project. In July representatives from the three countries met again for further talks, and are due to gather once more in Kabul in mid-September. The ADB has put up more than a mm $ for a feasibility study and is providing risk guarantees to investors.
"Things are moving rapidly forward -- much faster than I originally thought they would," said Naved Hamid, the ADB's senior economic adviser in Pakistan. "We believe this project is no longer in the realms of fantasy. We believe it's viable."

Afghanistan however is still wracked by instability, with little government control exercised beyond Kabul and deadly clashes between warlords in the unruly provinces frequent.
Hamid conceded that the insecurity was making potential investors nervous. Hindrances were also posed by continuing regional rivalries, especially between arch-foes Pakistan and India. The investment appeal would be greater "if the pipeline carried through to India," Hamid said. "But India is reluctant to put any faith in a pipeline that runs through Pakistan, and so to some extent the project remains hostage to India-Pakistan relations."

Source: Gulf Daily News
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