Warring nation holds key to oil riches of Central Asia

By Christopher Lockwood, Diplomatic Editor

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http://www.telegraph.co.uk/et?ac=006576086753008
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BEHIND the tribal clashes that have scarred Afghanistan lies one of the great prizes of the 21st century, the fabulous energy reserves of Central Asia.

Largely unexplored, and almost completely unexploited, Kazakhstan, Turkmenistan and Uzbekistan, all formerly components of the Soviet Union, but now independent, are known to possess vast oil and gas reserves. As supplies from the Gulf begin to peter out next century, these will become highly significant.

No one knows how much hydrocarbon wealth lies beneath central Asia's deserts, but most of the world's major oil companies are already prospecting there. "The deposits are huge," said a diplomat from the region. Kazakhstan alone may have more oil than Saudi Arabia. Turkmenistan is already known to have the fifth largest gas reserves in the world."

A consortium including BP, Mobil, Shell and Total has just completed what is thought to be the largest seismic study ever undertaken, in the Caspian Sea region of Kazakhstan, costing more than 130 million.

But there is an immense problem. The Central Asian republics are all land-locked and there is no way to get the oil and gas out. So a race has begun to find a route. There are three main contenders. Russia wants to tap into the mineral wealth of its former empire by pushing pipelines from its Black Sea terminal at Novorossiysk eastwards towards Kazakhstan.

Iran, which dreams of being a powerful player in the region, talks of driving a pipeline from its coast at Chabahar via Mashad into Turkmenistan and beyond.


Pakistan is keen to have a source of oil that bypasses Iran and Russia
Georgia, already at work on a pipeline crossing the Caucasus to tap the fields of Azerbaijan, thinks it could eventually be driven across or around the Caspian into Kazakhstan. But to Western, and especially American interests, none of these options look attractive. Georgia is too unstable, and the idea of allowing a Russian or Iranian hand to rest on the oil jugular is considered too dangerous. Hence the attractions of Afghanistan.

Another pipeline route exists, and is already at a detailed planning stage. This pipeline, initially for gas, would begin in the Dauletabad field in central Turkmenistan, traverse Afghanistan along the Herat-Kandahar corridor, territory controlled by the Taliban, and exit into Pakistan.

From Pakistan, it could either serve the local market, push on into India, or terminate at a tanker-terminal on Pakistan's Indian Ocean coast, probably at Gwadar. The cost would run into billions of pounds, with a figure of 1.3 billion quoted for a short pipeline to Pakistan. Analysts say the pipeline is not currently fundable, but if peace comes to Afghanistan, that could rapidly change. Even though the Taliban advocates medieval religious and social practices, it is a sharp negotiator.

Unocal, the Californian oil company, in alliance with Delta Oil, the Saudi Arabian company, has been in negotiation with the Taliban, as well as rival warlords, for much of this year over terms for the Turkmenistan-Pakistan pipeline. Preliminary agreement was reached between the two sides long before the fall of Kabul last month.

A vice-president of Unocal said last week that the victory of the Taliban could help the country if it brought stability. That would allow international investors to fund the pipeline, and eventually bring billions of pounds a year in transit revenues to Afghanistan.

Oil industry insiders say the dream of securing a pipeline across Afghanistan is the main reason why Pakistan, a close political ally of America's, has been so supportive of the Taliban, and why America has quietly acquiesced in its conquest of Afghanistan.

Pakistan is keen to have a source of oil that bypasses Iran and Russia. The evidence is already overwhelming that the Taliban, which orignated as a group of 2,000 religious students in refugee camps and religious schools just inside Pakistan, have been funded and partly equipped by Pakistani intelligence agencies throughout the two-year campaign that has now led them to Kabul.
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