Posted on 9-7-2002

Afghan Pipe Dreams
By Pratap Chatterjee* Special to CorpWatch, www.corpwatch.org

A proposed natural gas pipeline that would traverse Afghanistan has created
a power play in the region with governments jockeying for political control
as well as a share in the billions of dollars that would accompany such a
scheme. So far, however, international oil and gas corporations are
sniffing around the region and the World Bank has hinted it might give it's
blessing to the plan, but none has committed to a pipeline project.

Many political observers and critics of the US war in Afghanistan have
voiced suspicions that the true aim of the fossil fuel friendly Bush
administration's "war on terrorism" is to clear the way for such a
pipeline. Others, like John Pike, Director of GlobalSecurity.org, say that
while oil and gas are never far off US policy makers' radar screen, they
also have other objectives. "Right now I think the US policy is to keep a
new pipeline out of Iran at any costs." -- John Pike, GlobalSecurity.org
"The people who peddle fossil fuels are the most interested and most active
in seeking to influence the United States government," notes Pike. "But
right now I think the US policy is to keep a new pipeline out of Iran at
any costs," adds the former military analyst for the Federation of American
Scientists.

Meanwhile, human rights and environmental activists are keeping an eye on a
potential pipeline in the volatile region. On May 30th President Hamid
Karzai, then chairman of Afghanistan's interim administration, Pakistan's
president General Pervez Musharraf, and Saparmurat Niyazov, the president
of Turkmenistan, signed a memorandum of understanding, laying out plans to
build a 900 mile pipeline that would snake across southern Afghanistan,
from Turkmenistan's Daulatabad gas fields to the Pakistani port city of
Gwadar. Two weeks earlier, World Bank president James Wolfensohn told
reporters in Kabul that the international lending institution might be
interested in such a project. "We are not taking the entrepreneurial role,
but were it to come up we would certainly take a look at it. There are a
number of entrepreneurs already in the exercise so we will wait and see,"
he said.

Western governments are also taking a keen interest. "The pipeline is one
of those things out there in the future," a United States State Department
official told the Far Eastern Economic Review estimating that Afghanistan
could earn $100 million-$150 million a year in transit fees.

The region holds enough fossil fuels to service Europe's oil needs for 11
years: a prize that has many oil companies salivating. Current estimates of
natural gas reserves in four former Soviet republics: Azerbaijan,
Uzbekistan, Turkmenistan and Kazakhstan equaled more than 236 trillion
cubic feet while total oil reserves might reach more than 60 billion
barrels of oil. At current consumption levels, the region holds enough
fossil fuels to service Europe's oil needs for 11 years: a prize that has
many oil companies salivating, especially because labor costs in the region
are low and environmental standards practically non-existent. The high
stakes have generated strong interest in tapping these reserves and piping
them south through Afghanistan over the last decade or so, especially from
Unocal, a California-based oil corporation. Among the other companies
sniffing around for partners is Gazprom, a Russian oil behemoth.

Despite the institutional backing from financiers and local governments,
analysts say that pipeline is still years from being built and the current
discussions are really just an attempt to consolidate power in the region.
Julia Nanay, director of Caspian Services for the Petroleum Finance
Corporation, an energy consulting group in Washington DC, told CorpWatch:
"The United States is supporting this talk of a pipeline in an effort to
isolate Iran and aggravate the situation. And the Russians want to make
sure that oil and gas flows north not south." Indeed, the two former
superpower rivals are more interested in making sure that they have a place
at the table, says Nanay, than in actual funding for such a pipeline. "What
we are talking about is an effort to control any future venture. But right
now it would be pretty foolish to build a pipeline while the various
warlords are still feuding with each other in Afghanistan." Alastair
McKechnie, the Afghanistan country director for the World Bank, says that
the Bank is also simply keeping tabs on the situation. "Any revenue
whatsoever from apples to oil would be welcome in Afghanistan today. But I
would not advise support for a pipeline right now because there are far
more pressing needs. Even if someone were to approach us, we would look
very hard at such a proposal," he told CorpWatch.

However, entrepreneurs are already setting up shop. Earlier this year
Robert Mojave and Fariborz Shafei, two Iranian born businessmen, traveled
to Kabul and Mazar-i-Sharif, to look into the possibility of setting up a
Afghan branch office for Los Angeles-based Dynatek Corporation, a small
supplier of industrial pumps. Their potential customers are the oil
multinationals looking to build a pipeline from Central Asia through
Afghanistan to the Indian Ocean. "We want to be the first American company
to set up an office in Kabul and we want to get the exclusive right to
supply industrial pumps to whoever wants to build a pipeline," Mojave says.
Over the course of last few months, the two men have traveled to Dubai in
the United Arab Emirates, Baku in Azerbaijan and Teheran in Iran, to seek
out potential partners. In April Mojave was back in Kabul setting up his
office. "We are not betting on a company, we are betting on a strategy.
Remember all that American aid money has to be spent on American companies
and there aren't any other American companies there. We are the first," he
told Corpwatch just before returning to Afghanistan.

But US interest in a pipeline is not new. In 1997 a consortium led by
Unocal drew up plans to build a four foot wide pipeline that would snake
875 miles from the Dauletabad Field in southeastern Turkmenistan, passing
near the cities of Herat and Kandahar in Afghanistan, crossing into
Pakistan near Quetta and linking with existing pipelines at Multan. An
additional $600 million extension to India was also under consideration.
But in August 1998 Unocal halted development of the project after U.S.
forces fired missiles at guerrilla camps in Afghanistan in the wake of bomb
attacks on two U.S. embassies in Africa. One of their consultants in the
company's 1997 conversations with the Taliban was Afghan-born Zalmay
Khalilzad, who was appointed special envoy from President George Bush to
Afghanistan on December 31, 2001. As an adviser for Unocal, Khalilzad drew
up a risk analysis of a proposed gas pipeline from Turkmenistan across
Afghanistan and Pakistan to the Indian Ocean. Today Unocal says it has no
more interest in a Central Asian pipeline through Afghanistan and has
closed its offices in Kazakhstan, Pakistan, Turkmenistan and Uzbekistan
retaining operations only in Azerbaijan. "We have exited the region because
we have long term commitments on other places and our plate is full," says
Teresa Covington, a spokeswoman for the company.

Covington noted that other members of the original consortium such as
Crescent of Pakistan and Delta of Saudia Arabia were still pondering their
role in future joint ventures. The biggest player still in the game is
Gazprom, the world's largest natural gas company, which is 38% owned by the
Russian government.

A few years ago the yellow bumper sticker on the car of Elizabeth Jones,
then United States ambassador to Kazakhstan, read, "Happiness is Multiple
Pipelines." In reality the billion dollar pipeline investments have brought
great wealth to the Central Asian political bosses, all former senior
Communist party leaders from Soviet days, but not to their citizenry whose
average monthly wage is around $20. Recently Kazakhstan's foreign minister
Kasymzhomart Tokayev acknowledged that in 1996 President Nursultan
Nazarbayev moved $1 billion of oil funds into a secret Swiss bank account
without telling his parliament. "Pipelines have only brought misery to
local people in countries such as Colombia and Nigeria." -- Gopal Dayaneni,
Project Underground

And although substantial oil money has yet to flow into Turkmenistan's
coffers, President Niyazov has spent millions building marble hotels to
attract the multinationals to the region in addition to a gold statue of
himself in the center of town that rotates to reflect the sun. Others say
that the venture will not help the common people. Keith Griffin, an
economics professor at the University of California, expressed skepticism
that the money will ever flow to the local people. "We cannot expect to
re-float society on a pool of oil," he told a conference in Kazakhstan's
financial center.

Environmental and human rights activists say that the oil pipelines have
often brought more poverty and environmental destruction than wealth. "Look
at Nigeria and Colombia. Pipelines have only brought misery to local people
in those countries such as massive pollution of rivers and farmland from
spills and gas flaring and major human rights abuses by the military that
guards these operations" explains Gopal Dayaneni, oil campaigner for
Project Underground, a California-based activist group. Indeed if Gazprom,
the current front-runner for building the pipeline succeeds, the Afghan
population does not have much of a track record to draw comfort from --
every month the company is reported to spill one million gallons of oil, 25
times the amount of oil that Exxon spilled in Valdez, Alaska. Activists
like Dayaneni say they will keep a watchful eye on developments in the region.


* Pratap Chatterjee is a freelance journalist based in Berkeley,
California. Earlier this year he was on assignment in Afghanistan,
Turkmenistan and Uzbekistan.