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http://www.laweekly.com/ink/02/02/new-crogan.shtml
The Oil War
UNOCAL's once-grand plan for Afghan pipelines
by Jim Crogan
A victory by the U.S.-led coalition and its Northern Alliance supporters
would not only boost America's power and influence in this strategic Caspian
region, but it would reopen the door to a potential energy windfall for the
West.
Afghanistan's oil, gas and coal reserves are waiting to be exploited. And
neighboring Turkmenistan, the former Soviet Republic, is loaded with
resources, waiting to go to market. But landlocked by Uzbekistan and
Kazakhstan on the north and east, Afghanistan and Iran on the south, and
bordered by the Caspian Sea to its west, Turkmenistan has struggled to find
a viable supply route.
A 1995 proposal by UNOCAL, the Southern California oil giant, shows what
might be in store and gives a hint of influence the oil-friendly Bush
administration could have in charting the future of the strategic region.
UNOCAL proposed building twin oil and gas pipelines from Turkmenistan, south
through Afghanistan and Pakistan, to a shipping terminal on the Arabian Sea,
with a possible pipeline extension into India. To date, the roadblocks have
been twofold: Afghanistan's ongoing civil war and the lack of international
recognition for the Taliban government. UNOCAL says it has pulled out of the
project.
A U.S. Department of Energy (DOE) report, issued in June, ranked
Turkmenistan's reserve of natural gas, with more than 101 trillion cubic
feet, as the fifth largest in the world. After the breakup of the USSR, this
newly independent nation became embroiled in a payment dispute with the
Russian gas giant Gazprom, and lost its access to the region's only
pipeline.
UNOCAL, which has been publicly criticized for alleged human-rights abuses
involving its Burma pipeline operation, signed an agreement in 1995 with
Turkmenistan's president for life, Saparmurat Niyazov, to build the
890-mile, $2 billion pipeline. Its goal was to transport 1.9 billion cubic
feet per day of natural gas from the country's giant Dauletabad Field into
Pakistan's energy grid. The project has been on hold for several years.
Barry Lane, a UNOCAL spokesman, says there were only two viable routes for
this pipeline: Iran or Afghanistan. "And the U.S. sanctions against doing
business with Iran left us only one option," he says. Hoping to hedge its
bets against Iran or future OPEC cutbacks, the Clinton administration
offered backing for the projects.
In 1997, UNOCAL joined with Turkmenistan and six international companies:
Delta Oil company (Saudi Arabia), Indonesia Petroleum and ITOCHU Oil
Exploration Co. (Japan), Hyundai Engineering & Construction Co. (South
Korea), Crescent Group (Pakistan) and the Russian company Gazprom to form
the Central Asia Gas � Pipeline consortium (CentGas). However, UNOCAL
remained the driving force, controlling nearly half of its shares.
In addition to the natural-gas pipeline, UNOCAL also proposed building a
second 1,000-mile, $2.5 billion oil pipeline to take 1 million barrels per
day from Turkmenistan's proven reserves of 546 million barrels. The country
also has an estimated 1.7 billion barrels in offshore areas under the
Caspian Sea.
After UNOCAL completed negotiations with Niyazov, it opened talks with the
Taliban and opposition groups in the north, which later became the Northern
Alliance. The proposed deals would have paid Afghanistan up to $100 million
per year for access across its territory.
To show its good will, UNOCAL donated money to CARE projects in Afghanistan
and provided support for in-country earthquake relief efforts. The oil giant
also gave nearly a million dollars to the University of Nebraska's Center
for Afghan Studies. The money was used to provide pipeline-construction
training for Afghans and schooling for their children.
At the time UNOCAL was also being attacked by feminist groups for working
with the Taliban, whose regime denies human rights to women. But Lane
insists that issue was repeatedly raised during their pipeline talks, and
company-financed schooling was given to both boys and girls.
Lane says that CentGas met several times with Taliban delegations and
factions of the Northern Alliance. The meetings occurred during 1997 in
Afghanistan and at UNOCAL's Texas office. But little headway was made. "The
project quickly began to deteriorate," he says. "We emphasized to the
Taliban they had to form a stable government that would be internationally
recognized, before any construction could begin."
Lane says he wasn't involved in the Texas meetings and doesn't know whether
then-Governor George W. Bush, an ex�oil man, ever had any involvement.
UNOCAL's Texas spokesperson for Central Asia operations, Teresa Covington,
said the consortium delivered three basic messages to the Afghan groups. "We
gave them the details on the proposed pipelines. We also talked to them
about the projects' benefits, such as the transit fees that would be paid,"
she says. "And we reinforced our position the project could not move forward
until they stabilized their country and obtained political recognition from
the U.S. and the international community."
Covington says the Taliban were not surprised by that demand. "They had
heard it before." And, she adds, the Taliban asked UNOCAL if it was
interested in developing Afghanistan's energy resources.
Afghanistan's supplies are dwarfed by Turkmenistan's. The DOE and industry
analysts recently reported the Afghans have natural-gas reserves of 5
trillion cubic feet. With Soviet assistance, by the mid-1970s, that country
was producing 275 million cubic feet per day. Plans were made to increase
production, but mujahedeen sabotage destroyed the infrastructure. After the
Russian pullout in 1989, 31 wells were shut down. The ongoing civil war in
the north thwarted the Taliban's attempts to repair the distribution
network.
Afghanistan's proven oil reserves are estimated at 95 million barrels. Oil
exploration and development ended with the Soviet invasion of 1979. In 1998
the Taliban announced plans to revive the Afghan National Oil Company, shut
down 22 years ago. However, like its gas reserves, Afghan's oil fields lie
in the country's previously contested northern provinces.
Afghanistan is also estimated to have some 73 million tons of coal reserves,
most of it located between the towns of Herat and Badashkan in the
northwest, an area heavily bombed by U.S. warplanes and now controlled by
Northern Alliance forces.
In December 1997, UNOCAL arranged a high-level meeting in Washington, D.C.,
for the Taliban with Clinton's undersecretary of state for South Asia, Karl
Inderforth. The Taliban delegation included Acting Minister for Mines and
Industry Ahmad Jan, Acting Minister for Culture and Information Amir
Muttaqi, Acting Minister for Planning Din Muhammad and Abdul Hakeem Mujahid,
their permanent U.N. delegate.
Two months later UNOCAL vice president for international relations John
Maresca testified before a House Committee on International Relations about
the need for multiple pipeline routes in Central Asia. Maresca briefed the
members about the proposed Afghan pipeline projects, praising their economic
benefits and asking for U.S. support in negotiating an Afghan settlement.
But with no progress on the diplomatic and northern war fronts, financing
could not be secured, and the CentGas project stalled. In August 1998,
UNOCAL began throwing in the towel. It suspended its participation in the
consortium. Two months later it formally withdrew.
Covington says the company has turned its attention to other parts of the
world and doesn't plan on returning to these projects. However, backed by
Pakistan and Delta, the Saudi consortium member, Turkmenistan's Niyazov
continues to pursue financing.
A representative of the Turkmenistan embassy, who spoke on condition of
anonymity, acknowledged the pipelines were on hold. "We understand the
situation in Afghanistan needs to be stabilized and guarantees against
terrorist attacks must be obtained before anything can change," he says.
"But this is a very important project for our country, and it would profit
everyone involved," he insists. "So we are hoping that once peace is
restored in Afghanistan, building these pipelines will again become a
priority."
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