Another great oil rush

The Western charge is led by the US, governments and private entrepreneurs bringing with them the promiseand perhaps the illusionof untold economic prosperity and wealth. The US ambassador to Turkmenistan, Michael Cotter, told a group of Indian journalists travelling through the region, that the basic premise on which his government worked in Central Asia was to “ensure the independence and success of the economic and political sovereignty of these republics. It is not to recreate the Soviet Union, that would be an antagonistic force.”

Ashkabad, the capital of Turkmenistan, is a city of straight, paved roads built out of the bleak Karakum desert that dominates the landscape. Today, those seemingly worthless grains of sand hide hugely precious reserves of oil and natural gas, attracting Western oil and gas companies.

Meanwhile, the pipelines that joined the old Soviet network originating from this republic were turned off in March this year because consumers like Ukraine, Belarus and Georgia were too broke (they collectively owe $447 million) to pay for the gas they consume. That single move has served to reduce Turkmenistan’s dependence on Russia, and moved it closer to the Western agenda in the region. Instead, Ashkabad is now throwing its weight behind alternative pipeline routes going south through Afghanistan to the Arabian sea or west to Turkeythereby, coinciding with US political, economic and strategic interests in Central Asia.

“Turkmenistan has so much oil and natural gas that all it needs to do is turn on the tap and it will flow,” says Atul Gupta, director of Monument, the British Petroleum Company that has won two oil concessions in the Caspian sea belt. He estimates that if Turkmenistan sells one billion cubic feet of gas per day, it can earn as much as $1 million.

The country’s all-powerful president Saparmurad Niyazov realised this fact early on, and over the last three years he has wooed international oil and gas companies to do exactly that: Monument has tied up with US oil giant Mobil, Malaysia’s Petronas is around as is a Dutch Company, and Unocal, another US company and Delta from Saudi Arabia are aiming to build an oil and gas pipeline, worth about $2 billion each, through Afghanistan to Pakistan, with a possible extension to India. Unocal’s decision to do so has set the alarm bells ringing in Moscow, New Delhi, Beijing and Teheran. Washington’s unstinted support for Unocal, analysts say, not only edges out Russia, squeezes nearby Iran by prohibiting US companies from trading with that country and props up Pakistan as the new, glamorous end-consumer of Unocal’s oil and gas. Cotter admits that US policy of encouragement is to ensure that Central Asians “maximise” their options in exporting their energy resources, while a British observer pointed out that the Turkmen government is under “a lot of pressure from the US to make a route alternative to Iran and Russia.” He believes it could take a mere 18 months to build the pipelines, once the construction and financing for the project was secure.

Pakistan’s foreign minister Gohar Ayub Khan was in Ashkabad this week to tie up the last threads before the major parties in the pipeline deal end months of haggling over price and profit to conclude a deal in Islamabad next weekas well as to push all the parties to accept a conference on Afghanistan. Islamabad knows well that the oil-gas pipelines will never be builtand its own importance to the Western world will never be ensuredif the conflict in Afghanistan doesn’t end.

Interestingly, India could wield considerable influence in this oil-gas pipeline mosaic. International observers recognise that India’s regional status as well as its new found status as a large consumer, could substantially reduce the costs of the pipeline if New Delhi threw its weight behind them. One view is that such a pipeline could be built through Iran to the Persian Gulf, instead of through Afghanistan and the Arabian Sea. One British observer said he knew US companies “did not like it at all” that they were being forced to bypass Iran, and wanted to know why the US government was so tough about Iran. “If the US lifted its sanctions against Iran, a lot of American companies would shift base there,” he added.

John Imle, president of Unocal, admitting that such a large project could not do without international financing, said he had “informally” approached the Indian government on a possible extension of the gas pipeline from Multan in Pakistan to New Delhi, which could then tie up with the Bombay High network. But he insisted that Pakistan would buy enough gas even if India didn’t so as to make the project viableand that for the time being at least the Iran option could not even be dreamt about.

Imle said the World Bank had made clear it would only provide the money if a government in Kabul had “support and recognition”, and that the Taliban and the other groups in Afghanistan had told him that they supported the project because it would bring money into their country. Confidently, he added, “Every country we’re in, we’re in for a long haul.It just makes sense that the Afghans are not going to fight forever.”