Pipeline Politics: Oil, Gas And The US Interest In Afghanistan

Oil and gas are not the reason the US has attackedAfghanistan, but Afghanistan has long had a key place in US plans to securecontrol of the vast but landlocked oil and gas reserves of Central Asia. Thoughthe primary US motivation is to destroy Osama bin Laden’s sanctuary inAfghanistan, another, rather more pecuniary objective is also on the agenda,particularly in the search for an alternative government in Kabul. With theTaliban out of Kabul and the search for a new Afghan government on center stage,one criterion on Washington’s mind will be how best to make Afghanistan safefor a couple of billion-dollar pipeline investments.

In the case of the great natural gas and oil fields ofTurkmenistan, immediately north of Afghanistan, the US government has for adecade strongly supported plans by US-led business groups for both an oilpipeline from Turkmenistan to the Arabian sea via Afghanistan and a gas pipelinefrom Turkmenistan across Afghanistan to Pakistan. Such pipelines would serveimportant US interests in a number of ways:

• Drawing the Central Asian oil states away from the Russian sphere of influence and establishing the foundation for a strong US position
  
  

• Thwarting the development of Iranian regional influence by limiting Turkmenistan-Iranian gas links and thwarting a plan for a Turkmenistan-Iran oil pipeline to the Arabian Sea.
  
  

• Diversify US sources of oil and gas, and, by increasing production sources, help keep prices low
  
  

• Benefiting US oil and construction companies with growing interests in the region
  
  

• Providing a basis for much-needed economic prosperity in the region, which might provide a basis for political stability.
  

For much of the 1990s the United States supported theTaliban’s rise to power, both by encouraging the involvement of US oilcompanies, and by implicitly tolerating Pakistan and Saudi Arabia, two of itskey regional allies, in their direct financial and military support for theTaliban. The Taliban, which is committed to a particularly primitive vision ofSunni Islam, had the added advantage for the US of being deeply hostile to ShiaMuslims in neighboring Iran (as well as within Afghanistan).

A crucial condition for building the pipelines is politicalstability in Afghanistan, and for a time the US believed the Taliban couldprovide just that. Had it not been for the Taliban’s apparent tolerance of theformer US-supported Osama bin Laden, and the Taliban’s highly visibleextremely repressive attitude to women and other social issues, the US wouldmost likely have continued its support for the Taliban, and the construction ofthe pipelines would have got underway in the late 90s. Certainly Iran believedthat the US was behind Pakistani and Saudi support for the Taliban as part of along-term plan to contain Iran. But as so often before, US foreign policy basedon the principle of "my enemy’s enemy is my friend" helped generate theconditions that allowed the New York and Washington atrocities to be conceived.

The key to Central Asian politics is economic developmentin Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan and Kyrgyzstan, all of whichare amongst the poorest parts of the former Soviet Union. Most are authoritariandictatorships of the most dismal kind. For the past ten years the US has beenwooing the governments of these countries, and opening the doors for profitableinvestment by US companies.

Turkmenistan, Uzbekistan, Tajikistan and Kazakhstan make upthe eastern side of the Caspian Sea Basin, beneath which lie oil reserves torival those of Saudi Arabia and the world’s richest reserves of natural gas.If you read the trade newspapers and websites of the world oil industry, wordslike "fabulous", "huge", "enormous" flow across the pages describingthe Caspian Sea Basin gas and oil fields. But more importantly, these words gotogether with "undeveloped", "isolated" and "politically unstable".There are billions of dollars to be made there, but the possibility of realizingthese fabulous profits hinges on one crucial issue: how is the gas and oil toget to its potential markets? While the countries of Central Asia may befloating on a sea of hydrocarbon, they are far from both actual seas and centresof industry. – and deep in the heart of Islam

In the past the Caspian republics exported most of theiroil and gas to a pipeline grid integrated into the rest of the SovietUnion/Russia. But with the collapse of the Soviet Union, the terms of tradebecame very sharp. In the 1990s the ex-Soviet buyers of Caspian hydrocarbonscould no longer afford to pay world prices. And Gazprom, the old Soviet oilcompany that owned the pipelines, was selling its own oil in competition withthat of the Caspian republics. In 1997, Gazprom denied Turkmenistan access toits pipelines over a payment dispute, resulting in a devastating 25% drop in theTurkmenistan GDP. The ex-Soviet Russian pipeline network itself is past itsuse-by date, having been sloppily built with out-of-date technology, and itselfneeds billions of dollars simply to renovate it.

A small number of new pipelines have been built, but manymore are, as they say, in the pipeline. But all have costs in the billions, andeach of the possible routes from the Caspian Sea Basin – west, south,southeast and east – has very serious political difficulties. If Afghanpolitical turmoil could be ended, there are literally billions of dollars to bemade by US and Japanese companies, by the Turkmenistan, Afghan and Pakistanigovernments, and one key element of US planning for Central Asian regionalhegemony would be achieved.

The Northern Route: from the Caspian through Russia
An existing Russian pipeline to the huge oil terminal on the Black Sea portof Novorossiisk could be linked to the new fields in Azerbaijan and laterKazakhstan. A plan for this "Northern Route" involving the Caspian SeaPipeline Consortium of Russian and foreign corporations is pressing ahead, butfaces several severe obstacles. The first is the war in Chechnya, through whichthe first phase of this pipeline passes. The second is that the US is opposed toit for precisely the reasons that Russia likes it: it would be good for Russia.The third is that Turkey is uneasy about increasing Russian oil and gas tankertraffic exiting the Black sea through the already over-crowded 17 mile-longBosphorus/Turkish Straits which connect the Black Sea to the Mediterranean, andwhich now carry 1.7 million barrels/day of oil alone.

The Western Route (2): via Georgia to Turkey
In late September of this year, Azerbaijan and Georgia agreed on terms forpassage rights across Georgia of a gas pipeline from Azerbaijan to Turkey tostart exports in 2004. In total, the Trans-Caspian Gas Pipeline will cost about$1 billion, but would open the way to Azerbaijani gas reaching either Turkishdomestic markets or onward to Europe. This would fit with EU planning to createa gas grid stretching from the Caspian to the Atlantic. Georgia is stillpolitically unstable, but more importantly, this route is not especiallysuitable for the states to the east of the Caspian Sea – Uzbekistan,Tajikistan, Turkmenistan and Kazakhstan. Anything involving the Caspian Seaitself is regarded as extremely sensitive by oil companies because in the messleft by the break-up of the Soviet Union, there is no accepted legal frameworkfor governing the Caspian Sea itself. The US has been pressing hard for theproject to come on line quickly, both because it would begin the flow of seriousinvestment funds, and because it would strengthen its current favourite forregional strongman, Turkey, against its former favourite, Iran.

The Eastern Route: China
Another possibility of considerable importance for East Asia and Japan wouldbe a pipeline from Turkmenistan to Xinjiang in China, and then into the Chinesegas grid to the industrialized east coast – and possibly on to Japan. Theproblem however is the huge distance involved – more than 7,000 km. – andvery rugged terrain in places. According to a study prepared jointly byMitsubishi, Exxon and China National Petroleum, such a pipeline would cost morethan $10 billion. There is also a small problem of providing a tempting andvulnerable target to separatist movements in China’s western provinces. ChinaNational Petroleum recently abandoned an agreement with Kazakhstan to constructan oil pipeline east because of disagreements about cost. However, China isseriously interested in Caspian Sea hydrocarbon resources, and has even reportedan interest in a pipeline to the Arabian sea, with a view to importing gas andoil by supertanker.

The Southern Route: Iran
Turkmenistan shares a long border with Iran, and there is already a gaspipeline linking it to the northern region of Iran, where most of Iran’sindustry is located. Iran, of course, itself has very large gas and oilreserves, but these are located in the south of the country, close to thePersian Gulf. An expansion of the Turkmenistan-Iran relationship could bebeneficial to both states. More importantly, it would provide another route toTurkey, and hence Europe, or to the Indian Ocean. However, the prosperity ofIran is not something viewed with great favour in Washington. Nonsense aboutrogue states apart, Washington’s core concern about Iran is its role as thenatural dominant power in the Persian Gulf. When the Shah was in power, this wasto be lauded; come the Iranian revolution, to be abhorred. As French, Japanese,Italian, Chinese, Malaysian and Russian companies have moved back into apolitically changing Iran, American oil and construction companies have longbeen nudging Washington to soften its stance toward Iran, and in particular toabandon the Iran and Libya Sanctions Act of 1996. But until Washington issure it can control ensure the safety of its own oil interests in Saudi Arabiaand other conservative Gulf states, there is little likelihood of Washingtonsupporting a major Iranian pipeline for Caspian Sea Basin gas.

The Southeastern Route: Afghanistan to Pakistan
For gas exporters, cost rises with length of pipeline. The shortest andcheapest export route for Turkmenistan oil and for its vast gas reserves isthrough Afghanistan, and serious planning for both oil and gas pipelineconstruction by US companies has long been in place. Turkmenistan, Uzbekistan,Afghanistan and Pakistan agreed in 1997 to build a large Central Asian Gaspipeline through the less mountainous southern parts of Afghanistan to Pakistan,and then possibly on to the growing market of India. The Central Asian GasPipeline Consortium was made up of Unocal (US, 47% share), Delta Oil (SaudiArabia, 15%), Government of Turkmenistan (7%), Itochu Oil Exploration (Japan,6.5%), Indonesia Petroleum [INPEX] (Japan, 6.5%), Hyundai Engineering andConstruction (5%), and the Crescent Group (Pakistan, 3.5%). Unocal was the leaddeveloper, much encouraged by the US government. In December 1997, seniorofficials of the US Department of Energy meeting in Washington with Talibanministers put their blessing on the enterprise.

The $1.9 billion Centgas pipeline is to be 120 cm. indiameter, and to run 1271 kilometers from the Afghanistan-Turkmenistan border,due south and then east, generally following the Herat – Kandahar road, thencross the Pakistan border at Quetta, terminating at Mulat. The Turkmenistangovernment has agreed to build a short pipeline to the huge Dauletabad gasfield. 20 billion cubic meters of natural gas per year will flow down thepipeline, and the Turkmenistan government has guaranteed to deliver 708 billioncubic meters of gas to the consortium – equivalent to the entire reserves ofthe Dauletabad field.

Just how much the consortium stands to make depends on manyfactors, especially fluctuations in the price and demand for natural gas in themarkets of East and Southeast Asia. But there are clearly huge profits to bemade. And for Pakistan and Turkmenistan, as well as Afghanistan, the projectwould be immensely beneficial. For Afghanistan it would be the first majorforeign investment since the Soviet invasion in 1979. For Pakistan it could be akey to the next stage of industrialization. Just how much the Centgas consortiumagreed to pay the Taliban for transit rights is unknown. But Unocal’scompetitor in the race to build an oil pipeline from Turkmenistan throughwestern Afghanistan to the Arabian Sea coast of Pakistan -- the Argentiniancompany, Bridas -- was reported to have offered the Taliban $1 billion intransit fees, plus a considerable amount of railroad track, road construction,and a police post building every 20 km. along the pipeline to by garrisoned byTaliban troops.

The US government pressured Turkmenistan to give preferenceto the Unocal-led Centgas consortium over Bridas. In 1997 Centgas got the gaspipeline contract, but by the time it was ready to commence work, the politicalsituation in Afghanistan that had looked promising to US eyes in the mid-1990shad deteriorated. Civil war continued, the Taliban’s cultural extremism andhostility to women had exploded in the world media, and Afghanistan had become amajor terrorist base. In August 1998, the US attacked bin Laden’s Afghanistancamps, and four months later, Unocal pulled out of Centgas. The combination ofinstability, pressure from the US government and attacks from shareholders andwomen’s groups in the US was too much.

With Afghanistan at war with itself and the United States,the alluring Centgas project was on hold, despite repeated efforts to re-startthe consortium by the governments of Pakistan, Turkmenistan and Afghanistan.With the profits to be made so enormous, Unocal was reported to be trying toedge back into the project last year. But in addition to its obvious problems inAfghanistan, Unocal is being sued in a US court for use of Burmese forced labourover its Thailand-Burma project. (If this case succeeds, it will be the firstoccasion in which a US court has held a US corporation legally responsible forforeign human rights violations related to its profit-making activities; Unocalcould face many millions in damage awards.) And the United States governmentimposed economic sanctions on Myanmar, banning new investment, largely becauseof the domestic reaction to Unocal’s exploitation of Burmese forced labourorganized by the Myanmar dictatorship.

Meanwhile Unocal remains the lead developer on theconsortium to build a 105-cm diameter 1700 kilometer-long oil pipeline fromnorthern Turkmenistan through Afghanistan to a Pakistani port on the ArabianSea. A Unocal spokesman boasted to Congress that it would compare with the giant(and environmentally risky) Trans-Alaska Pipeline. Unocal – and Japanese -executives regard this $2.5 billion plan as by far the cheapest and leastdifficult way of bringing Turkmenistan’s oil to the sea, where it can beloaded onto supertankers bound for Japan and Korea, and possibly China..

Oil and gas are not the direct causes of the war inAfghanistan, but understanding the motives of long-term US policy towards thatcountry is important. The pursuit of hydrocarbon interests has been a constantof US policy in the region for more than half a century. Having created the mujahadinresistance to fight the Soviets during the Cold War, the US then lost interestin the country, and allowed its former clients to destroy it. In order to gainthe stability necessary for oil and gas operations, it flirted with the Taliban,until finally the whirlwind its earlier support for the mujahadin hadcreated came blowing back home as a terrorist horror.

There is a great map of all the Central Asian pipelines atthe end of the following file:

USDept of Energy, Caspian Sea Region Oil and Natural Gas Reserves

Other useful links:

Tradeand Environment Database: Turkmen Oil and Gas
Central Asia Newsnet
US Dept of Energy, Afghanistan page
US Dept of Energy, Caspian Sea Region page
Michael Ratner home page, for information on the suit against Unocal overBurmese forced labour
Instituteof War and Peace reporting, Central Asia

(By arrangement with Znet)