The Hindu : Trans-Afghan gas pipeline a pipe dream?

Online edition of India's National Newspaper
Monday, Dec 30, 2002

International

International

Trans-Afghan gas pipeline a pipe dream?

By Vladimir Radyuhin

MOSCOW DEC. 29. The agreement to build a trans-Afghan gas pipeline from Turkmenistan to Pakistan, signed last week by the leaders of the three countries appears to be driven more by political than economic compulsions.

Meeting in Turkmenistan's capital, Ashgabad, on December 26-27, the Turkmen President, Saparmurat Niyazov, the Pakistani Prime Minister, Zafarullah Khan Jamali, and the Afghan President, Hamid Karzai, penned a framework accord to construct a $3 billion, 1500 km gas pipeline to pump 30 billion cubic metres of natural gas from the massive Dauletebad fields in south western Turkmenistan via Afghanistan's Kandahar to the Pakistani port of Gwadar.

The project would give Turkmenistan a strategic alternative to the only trunkline route through Russia, as a small-capacity pipeline Turkmenistan built to Iran in the 1980s did not break Russian monopoly on Central Asian gas exports.

Afghanistan will get transit revenues and a powerful boost to industrial growth. Pakistan is interested in a cheaper source of gas for its growing market. However, formidable obstacles confronting the pipeline may make it too risky a business proposition.

The continuing turmoil in Afghanistan may well put off potential investors, as it already did in the 1990s, when the U.S. Unocal pulled out of the project for lack of security guarantees. Political

situation in Pakistan is also far from stable, while Turkmenistan's leader, Mr. Niyazov, is a notoriously unpredictable negotiating partner.

A preliminary feasibility study currently conducted by the Asian Development Bank is likely to conclude that the pipeline would only be cost-effective if extended to India. Given the current state of Indo-Pakistani relations, Delhi would not agree to a plan that gives Islamabad control over its gas supplies.

Last, but not least, Russia is opposed to the project. Russia is keen to have Turkmenistan strapped to its pipelines both for economic and geo-political interests. Moscow is pushing for the creation of a gas equivalent of the OPEC with the former Soviet gas-producing and -transporting countries, Turkmenistan, Uzbekistan, and Kazakhstan. Faced with falling gas production at its Siberian fields, Russia increasingly depends on Central Asian gas to fulfil its long-term contracts with Europe.

Gazprom has offered to buy up to 50 billion cm of Turkmen gas a year on a long-term basis.

Also, Russia is lobbying for an alternative offshore gas route from Iran to Pakistan and India. Not surprisingly, Turkmenistan's efforts to get Russian companies interested in the trans-Afghan pipeline have met with little success. Even though the trans-Afghan gas pipeline may prove little more than a pipe dream, its participants hope to reap benefits just by talking about it.

For the Pakistan President, Gen. Pervez Musharraf, it offers a rare opportunity to project Pakistan's constructive involvement in Afghanistan and Central Asia. Mr. Karzai can use the proposed pipeline as evidence of political stabilisation in Afghanistan to attract more international aid. For Mr. Niyazov the project is an important bargaining chip in price negotiations with Russia's Gazprom.

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