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FLASH 33 (5/16/02): Afghan Gas Pipeline Planned, Will Depend on US Commitment to Afghan Security (updated 7/25/04)

[Update, 7/31/02: Hamid Karzai signed the pipeline agreement on May 30, 2002, in time to influence the loya jirga which elected him president. The not-so-subtle whiff of petroleum politics was aptly caught by the Irish Times, in their issue of June 22:

"A strong smell of fossil fuel hung over the Loya Jirga proceedings. On May 30th, Mr Karzai and the presidents of Turkmenistan and Pakistan signed an agreement to build a gas pipeline from Turkmenistan through Afghanistan to Pakistan. Mr Karzai's Oil Minister said there was a good chance the US company UNOCAL (formerly Union Oil Company of California) would obtain the contract to exploit the pipeline. Mr Karzai, it just so happens, was a salaried consultant to UNOCAL in 1996 and 1997, when he drew up a feasibility study of the Afghan pipeline. During that time, he became friends with another UNOCAL consultant, Mr Zalmay Khalilzad. [[Further update, 7/25/04:"Several sources, most notably the documentary film Fahrenheit 9/11, have reported that Karzai once worked as a consultant for the oil company Unocal. Spokesmen for both Unocal and Karzai have denied any such relationship [1] (http://emperors-clothes.com/interviews/lane.htm) [2] (http://209.41.191.254/cnn.cfm?id=118579&category=Economy&Country=AFGHANISTAN). The claim appears to have originated in the December 9, 2001 issue of the French newspaper Le Monde, and some have suggested that Karzai was confused with U.S. ambassador to Afghanistan Zalmay Khalilzad."]]

"Today, Mr Khalilzad is US special envoy to Afghanistan, widely known as "Bush's Afghan". Mr Khalilzad was present for the 10 days of the Loya Jirga, constantly cajoling delegates and talking on his mobile phone. "Without us, this Loya Jirga would not have taken place," he said. Many Afghans claim Mr Khalilzad, not Mr Karzai, is the real ruler of Afghanistan."]

On May 13, the BBC announced that: `Afghanistan hopes to strike a deal later this month to build a $2bn pipeline through the country to take gas from energy-rich Turkmenistan to Pakistan and India. Afghan interim ruler Hamid Karzai is to hold talks with his Pakistani and Turkmenistan counterparts later this month on Afghanistan's biggest foreign investment project, said Mohammad Alim Razim, minister for Mines and Industries told Reuters.'

`Mr Razim said US energy company Unocal was the "lead company" among those that would build the pipeline, which would bring 30bn cubic meters of Turkmen gas to market annually. Unocal - which led a consortium of companies from Saudi Arabia, Pakistan, Turkmenistan, Japan and South Korea - has maintained the project is both economically and technically feasible once Afghan stability was secured. "Unocal is not involved in any projects (including pipelines) in Afghanistan, nor do we have any plans to become involved, nor are we discussing any such projects," a spokesman told BBC News Online.'

Meanwhile TheNewsMexico.com has carried an Agence France-Presse story of 5/16/02 reporting that the World Bank Chief spoke on Kabul on 5/15/02 about his own efforts to promote the pipeline:

`World Bank chief James Wolfensohn said Wednesday he had held talks about financing a fuel pipeline to channel massive gas reserves from Turkmenistan through Afghanistan to India or Pakistan. Wolfensohn, who was in the Afghan capital to open the financial institution's offices here and to confirm 100 million dollars of World Bank grants for the interim administration, said a number of companies had already expressed an interest in the project. Turkmenistan is reportedly estimated to have 159 trillion cubic feet (4.8 trillion cubic meters) of gas reserves, the 11th largest in the world. But its landlocked status and the 23 years of war in Afghanistan have scuppered previous plans to open up the reserves to the outside world. "I have spoken to a number of people concerning a possible pipeline from Turkmenistan through Afghanistan to Pakistan and either out through a port in Pakistan or through to India," Wolfensohn told reporters. "We have expressed interest in that but I think the principals need to discuss that further."'

These announcements come at a time when the US (according to Stratfor on 5/15/02) is debating whether or not to help quell the dispute between the Karzai central government and the dissenting warlord Padsha Khan in Paktia Province. The problem is complicated by the fact that Padsha Khan's brother is the governor in Khost province, where the search for al-Qaeda has also been focused.

As Stratfor notes, `Washington may find it necessary to back Karzai ..., especially during the critical weeks before the Loya Jirga conference that will create the next phase of the Afghan government. Karzai is a close ally with little political capital to spare, and allowing him to twist in the wind will shred his credibility.'

The revived interest in the gas pipeline occurs at a time of major realignments in the global petroleum industry. Recently Western Europe and even the US have expressed interest in purchasing Russian oil, thus weakening OPEC control over oil prices, and especially the power of Arab oil producers to revive the threat of a boycott.

Two new pipelines, although both minor (from Baku to the Georgian coast of the Black Sea, and from Turkmenistan into the Iranian pipeline network), have broken the former Russian control over exports from the Caspian basin. But increased Russian exports to Western Europe and perhaps the US have compensated for this. Russia also seems satisfied with the status of its clients, the Northern Alliance, in the interim Karzai government of Afghanistan.

On the other hand, the prospects for the viability of a pipeline are intimately linked to the prospects for peace and security in Afghanistan, which are poor unless the US becomes more engaged.

As Ahmed Rashid quotes in Taliban (169), "peace can bring a piepline, but a pipeline cannot bring peace."

(For background, see my general section on "Afghanistan, Turkmenistan Oil and Gas, and the Projected Pipeline".