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Afghan role in new power game

Turkmenistan is one Central Asian country with significant oil reserves
Turkmenistan is one Central Asian country with significant oil reserves  

By CNN's Mark Davies

(CNN) -- A new struggle for dominance could be set to be played out in Central Asia as the world's energy companies watch the fall of the Taliban in Afghanistan.

More than 100 years ago, the country was at the heart of the matter as two great empires battled for dominance in Central Asia.

Afghanistan was at the centre of a power game between Britain and Russia as both sought to protect their interests and improve communication links to outposts all over the region.

Now, despite carrying the scars from years of conflict, it is significant in terms of its geographical position as a potential transit route for oil and natural gas exports from Central Asia to the Arabian Sea.

New era as Caspian pipeline opens 

Indeed, plans for pipelines were underway in the mid-1990s -- but stumbled because of continuing instability in Taliban-ruled Afghanistan.

Now the world's oil and gas companies will be eyeing the situation again as the Taliban crumbles.

Russia -- an enthusiastic supporter of the Northern Alliance -- is also thought to be keen to develop warm relations with a new regime in Kabul with a view to future initiatives in terms of oil and gas.

The primary attraction is the existence of oil and gas reserves in Central Asia.

Afghanistan is important because of its location between those reserves and the growing economies of south Asia.

In a statement to the U.S. House subcommittee on Asia and the Pacific in 1998, John J. Maresca, vice president, international relations of U.S. company Unocol said natural gas reserves in Azerbaijan, Uzbekistan, Turkmenistan and Kazakhstan equal more than 236 trillion cubic feet.

He said the region's total oil reserves may reach more than 60 billion barrels of oil -- enough to service Europe's oil needs for 11 years.

The problem, he acknowledged, was getting those resources to markets. Central Asia is isolated by vast distances and by mountains and seas, while oil and gas companies also face political obstacles such as the conflict in Afghanistan or countries in key geographical positions but also facing international sanctions.

Moreover, any existing infrastructure was built during the Soviet period -- and heads north and west.

In 1998, Pakistan, Turkmenistan and the Tailban sought to put plans for a southern route for these reserves into action.

The three countries signed an agreement to arrange funding for a $2bn, 890-mile natural gas pipeline to transport natural gas from Turkmenistan to Pakistan -- running through Herat and Kandahar in Afghanistan.

The Central Asian Gas Pipeline project, known as Centgas, had been formed by oil companies in 1996.

But the plan foundered amid the continuing instability in Afghanistan, with Unocol pulling out and Russia's Gazprom relinquishing its 10% stake.

Other participants in the plan came from Saudi Arabia, Japan, Pakistan and South Korea.

Unocol has no plans to get involved in the project again, company spokeswoman Teresa Covington told The Associated Press.

Unocol had stated that the project could not proceed until an internationally recognised government was in place in Afghanistan, according to the U.S. government's Energy Information Administration (EIA).

But other major energy companies could now see opportunities as the world considers the future of Afghanistan, Rob Sobhani, president of Washington-based Caspian Energy Consulting and a former consultant in Central Asia for Amoco, now part of British Petroleum, told AP.

He estimates that a future Afghan government could bring in $100 million in revenue from the pipeline.

The Argentine company Bridas is another potential player, having been involved in the past in negotiations with the Taliban.

The attraction of a route south remains despite the uncertainty over Afghanistan's future for several reasons.

Russian President Vladimir Putin, right, with Prime Minister Mikhail Kasyanov: Russia has backed the Northern Alliance strongly
Russian President Vladimir Putin, right, with Prime Minister Mikhail Kasyanov: Russia has backed the Northern Alliance strongly  

The Russians are keen to transport reserves from Central Asia to world markets, particularly in south Asia.

Two current projects -- with U.S. firms involved -- would see new pipelines going west to Russian ports on the Caspian Sea and the Black Sea and on to the Mediterranean.

One, run by the Caspian Pipeline Consortium, which includes the Russian government, opens on Tuesday from Kazakhstan to a Black Sea terminal near Novorossiisk.

U.S. companies have invested around $700 million in the pipeline, and U.S. Energy Secretary Spencer Abraham will attend the opening in Kazakhstan.

But Maresca told the U.S. committee in 1998 that "even if both pipelines were built, they would not have enough total capacity to transport all the oil expected to flow from the region in the future; nor would they have the capability to move it to the right markets. Other export pipelines must be built."

The route south for new pipelines also becomes all the more attractive because other potential routes are fraught with difficulties; Iran for instance is out of the question because of U.S. sanctions.

The option of going south therefore becomes more attractive -- and some observers say the Russians, who have aided the Northern Alliance as it battled the Taliban, will be keen to establish good relations with a new regime in Kabul in order to examine this area.

It could mean Russia controlling a major part of the world's future oil supplies - and may explain why NATO is warming to closer ties with Russia and why there has been what some say is a softer line from the U.S. on President George W. Bush's plan for a missile defence shield.

Unocol's Maresca said in 1998 that Afghanistan was the best option because it is the shortest route to the sea and has what he called a "relatively favourable terrain for a pipeline."

He went on: "The route through Afghanistan is the one that would bring Central Asian oil closest to Asian markets and thus would be the cheapest in terms of transporting the oil."

Unocol had also examined the potential of a $2.5 billion, 1,040-mile Central Asian Oil Pipeline Consortium, gathering oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia.

Doubts remain though about the importance of Central Asian reserves of gas and oil.

Some analysts say these reserves are not as substantial as thought. They also say there is little room for manoeuvre over existing pipelines as they are controlled by Russia.

Building a pipeline through Afghanistan would also have practical difficulties, because of security concerns, says Hurst Grove, head of Columbia University's Center for Energy, Marine Transportation and Public

The pipeline would go through mountains, meaning a massive operation in a lawless area controlled by warlords, he said.

And the EIA has said it is "unlikely" that the pipeline through Afghanistan will be built.

Indeed some experts reject altogether the idea that oil and gas will be key factors in post-Taliban Afghanistan.

"There was discussion of the pipeline to carry gas to Pakistan, but it was abandoned way before current events because of political, economic and stability problems," Paul Stevens, professor of petroleum policy and economics at Dundee University, told the BBC.

"So the idea that oil is now driving this war is totally unrealistic. It would be more sensible to be considering a pipeline on the moon."


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