Central Asia/Russia


	June 6, 2002	atimes.com

Central Asia/Russia

Plenty for everyone in the pipeline
By Nadeem Iqbal

ISLAMABAD - Reviving a gas-pipeline project that was postponed a few years ago because of instability in Afghanistan would open economic opportunities in the West Asian region and provide much-needed cash for the three proponent countries, say analysts.

Pakistani Natural Resources Secretary Abdullah Yousaf says that the project is a "win win" concept with promising prospects for Afghanistan, Turkmenistan, and especially for Pakistan, as the gas supplied from the pipeline would increase the country's industrial activity.

Rasul Bakhsh Rais, director of the area study center of Quaid-I-Azam University, agrees. He says that the proposed gasline would create much spinoff effect for Afghanistan's economy besides generating jobs, transit fees and developing technical skills. More than these gains, regional cooperation in the energy sector would further deepen the interests of Afghanistan's neighbors in its stability and peace.

The pipeline project, which is estimated to cost between US$2 billion and $3 billion, could pump $300 million in annual royalties into the cash-starved Afghan economy, according to projections. Last Thursday, Pakistani President General Pervez Musharraf, Afghanistan's interim leader Hamid Karzai and Turkmen President Supramurad Niyazov signed in Islamabad an agreement to construct the 1,500-kilometer gas line.

The transnational gas pipeline would originate in Turkmenistan's Daulatabad gasfields, which have a proven gas reserve of 23 trillion cubic feet, and pass through Afghanistan, then end at the Pakistani seaport of Gwadar. There gas would then be converted into liquefied natural gas (LNG) for export to Japan and other countries in the Far East - and possibly even to India if New Delhi and Islamabad can resolve their differences.

Musharraf said a group would conduct a new feasibility study on the project before inviting tenders from international companies and seeking financial assistance from multilateral lending agencies such as the World Bank and Asian Development Bank. Some officials believe they could entice the UNOCAL-led multinational consortium back to execute the project.

The pipeline project was conceived by US company UNOCAL in 1996 to sell gas to the energy-short Indian market. The plan envisaged that the pipeline would enter India from the central Pakistani city of Multan by constructing another 580km of pipeline.

In 1995, Argentine company Bridas proposed building an 875km pipeline from Turkmenistan's Yashlar fields, crossing southern Afghanistan into Pakistan's western Baluchistan province, where Pakistan's gas reserves and pipeline network originate. The proposed network had a provision for extension to India via Multan, and was an open-access pipeline into which other countries could also feed their gas.

But Bridas lost to UNOCAL and, in 2000, UNOCAL itself pulled out of the project because of the poor security situation in Afghanistan under Taliban rule. Although some normalcy has returned to Afghanistan, there are still security fears in the country, which its leader has been quick to allay.

Addressing journalists in Islamabad during last week's signing, Karzai said peace and security in Afghanistan are satisfactory, adding that the convening of the loya jirga (grand council) starting next Monday is another step toward restoring stability and effective government in the war-torn country.

But for some, the bigger question now is not stability but economics: what is the target consumer market? The Far East is one market only, they say. Adnan Ali Shah, a researcher on Central Asian studies at the Institute of Strategic Studies, says the pipeline could only be feasible if the primary gas market would be the huge Indian market, and Pakistan only a secondary one.

Under the revived project, the gas line is still going via Multan to Gwadar, but now it is only in the third stage that the pipeline would be extended to India, provided that the political disputes are resolved.

Another gas line, whose fate is in limbo, is the Iran-Pakistan-India line. If these two projects materialize, Pakistan could earn more than $1 billion in annual royalty alone, besides covering its growing energy deficit. It is no wonder that Musharraf has unequivocally said that Pakistan was committed to providing gas to India through a gas pipeline from Iran or any other country.

Being the second major port of the country after Karachi, Gwadar is at the door of the Persian Gulf and at the intersection of the oil-rich Middle East, South Asia, with one-fifth of the world's population, and the energy-rich Central Asian republics.

It is estimated that the demand for natural gas will increase fourfold in India until 2010, and more than double in Pakistan. At the current rate of production, the proven reserves in India and Pakistan would last for less than 40 years.

In the past, several options for importing natural gas have been examined by both countries. Pakistan has signed memoranda of understanding with Iran, Qatar and Turkmenistan, while India has explored the possibility of importing LNG via pipeline from Oman or Iran.

The option of importing from Oman via deep-sea pipeline had been postponed indefinitely because of technical difficulties, as the line was to be constructed at depths of 3,000 meters.

Central Asia offers the most easily accessible and cost-effective gasfields for India. Turkmenistan has the 11th-largest gas reserves in the world with 159 tcf (trillion cubic feet), Uzbekistan 110 tcf, and Kazakhstan 88 tcf, while Azerbaijan and Uzbekistan have 35 tcf each.

But the political differences between India and Pakistan have hindered Pakistan serving as a gateway to gas-rich Central Asia. Many experts believe that financially viable projects such as the Turkmenistan-South Asia or Iran-South Asia pipelines may force the leaders of the two rival countries to shun their political differences and give priority to the economic well-being of the people, although this does not seem like an immediate possibility.

(Inter Press Service)