The Pipeline Interests Beneath the Surface of Events in Afghanistan.

This piece in Pakistan Today is precisely what is not to be found in the newspapers and TV media in Britain. It sets out the reality of what's at stake in Afghanistan beyond the platitudes offered by Western politicians of the sort who attended the Bonn Conference on the future of this troubled land ( I draw attention to key points in bold ).

On 14th November 2011, Turkmenistan’s President Gurbanguly Berdimuhamedow along with Prime Minister Yusaf Raza Gillani signed five agreements and memoranda of understandings (MoUs) at the Prime Minister’s House. The most momentous signature however was on the Gas Sales and Purchase Agreement (GSPA) which is being touted as materialising the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project by 2016.

TAPI has been paraded as being worth $7.6 billion, and has been staunchly backed by the US – that would rather see Pakistan adopt this pipeline in lieu of the Iran-Pakistan gas pipeline. According to GSPA, the gas price would be nearly two-thirds of the price of crude oil in the international market.
However, the total cost of the project could only be calculated after reaching an agreement over the transit fee with Afghanistan and after negotiations with India.

After December 2010’s ‘inter-government agreement’ (IGA) – that was signed by President Asif Zardari, Afghan President Hamid Karzai, President Berdimuhamedov and Indian Petroleum Minister Murli Deora in Ashgabat, the capital of Turkmenistan on 11th December 2010 – the aforementioned GSPA is along the same line. An agreement on ‘gas sales purchase relating to the TAPI pipeline project’ was signed by Mubeen Saulat, Managing Director of Inter-State Gas System and Amanali Hanalyev, Chairman of Turkmenistan Gas Trade Concern.

TAPI gas pipeline project is being developed under the auspices of the Asian Development Bank, and will transport natural gas from the Caspian Sea from Turkmenistan, through Afghanistan, then Pakistan and eventually into India. The flag bearers of the project believe it to be the ‘modern continuation’ of the Silk Road. However, there are a myriad of reasons that generate causes for both optimism and skepticism.

The TAPI project’s origin can be traced all the way back into early 1990s and the quest of oil magnates in Kazakhstan and Turkmenistan to trace a networking route without touching the sensitive areas of Iran and Russia. While Russia ruled the roost and had the hegemony over the export pipelines of both Kazakhstan and Turkmenistan, these international oil companies were in a dire need to expand their export route; especially after the East European (or north Asian, whichever way you prefer) leviathan constantly rebuffed the idea of allowing the use of its pipeline network.

Nonetheless on 15th March 1995 the project kicked off, after an inaugural MoU was signed between Turkmenistan and Pakistan for a pipeline project. The project was backed by leading global companies like the Argentinean ‘Bridas Corporation’, the US company ‘Unocal’ and the Saudi oil company ‘Delta’.

The length of the TAPI pipeline is said to be 1,680 km (1,040 miles) and will originate from Dauletabad gas field located in the Amy-Darya Basin in the Ahal province in Turkmenistan. The gas field is within proximity of the Turkmenistan-Iran border. From the Dauletabad gas field, the pipeline will progress towards Afghanistan. After entering the Afghani border, the pipeline will run parallel to the highway between Herat and Kandahar; and along that route the pipeline would eventually progress towards Pakistan.

The pipeline would enter Pakistan from the western vicinity in Quetta, Baluchistan and would gradually progress towards Punjab, culminating most notably in Multan. Fazilka – an Indian town near the Indo-Pak border – is being peddled as the final destination of the project, after which all four of Turkmenistan, Afghanistan, Pakistan and India would be linked together by this lucrative natural gas project.

Turkmenistan has the world’s fourth largest gas reserves and the proposed gas pipeline has a 735-km section across Afghanistan followed by an 800-km portion which passes through Pakistan before reaching India. The pipeline will have a radius of 710 millimeters (28 inches); a 1420 millimeter (58 inch) diameter, 4461.62 millimeter circumference and 6,335,529 millimeter square opening. The working pressure will be 100 standard atmospheres (10,000 kPa).

The initial capacity is said to be 27 billion cubic meters (bcm) of gas per annum; 2 bcm of which will be provided to Afghanistan before the residual 25 bcm is equally divided between Pakistan and India, 12.5 bcm each. The capacity is touted to augment up to 33 bcm eventually. The pipeline would have six compressor stations built along the pipeline. The estimated cost on the project is $7.6 billion and it is being financed by the Asian Development Bank.

Unocal and Delta signed a separate agreement with Saparmurat Niyazov, then president of Turkmenistan on 21st October 1995 to further enhance the prospects of the pipeline project. In August, the following year, the Central Asian Gas Pipeline, Ltd (CentGas) consortium for pipeline construction, under the guidance of Unocal was formed, which further boosted the development.

Then, CentGas was made one of the signatories in the formal signing ceremonies in Ashgabat on 27th October 1997, by the government of Turkmenistan and numerous international oil companies. Owing to the fact that the pipeline had to traverse the turbulent region of Afghanistan, an understanding with the Taliban – ruling over the region undisputedly in the late 90s was necessary. Robert Oakley’s – then US ambassador to Pakistan – move to CentGas in 1997 was another milestone move, which paved the way for further developments.

The Taliban were eventually taken on board in January 1998, when they opted for CentGas over the Argentinean Bridas Corporation and eventually gave the green signal to the project. As the Russian grip over the region and its pipe networks weakened, in June 1998 Russian company Gazprom also relinquished its 10 per cent stake in the company.

However, a major blow to the project came on 7th August 1998, when US embassies in Nairobi and Dar es Salaam were reportedly bombed under Osama Bin Laden’s command, and Mullah Omar announced that the former had the full support of the Taliban. And hence on 8th December 1998, Unocal withdrew from the project and abandoned its offices in Afghanistan and Pakistan.

After it seemed as if the pipeline deal was being shelved for good in the tail end of the previous century, the noise generated in the early 2000s begged sanguinity. A new deal pertaining to the agreement over the pipeline was on the horizon in 2002, and on 27th December 2002 a deal was signed by the leaders of Turkmenistan, Afghanistan, and Pakistan.

By 2005 a final draft was sketched out, and Asian Development Bank submitted the final version of a feasibility study designed by a British company named Penspen. The word is that, after the US commenced its well documented ‘war on terror’ and eventually supplanted the Taliban from the authority in Afghanistan, the project has become a veritable possibility and has had the full backing of the US.

However, due to the Afghan region being a tumultuous zone throughout the previous decade, work on the project has failed to materialise and has stalled. Nonetheless, on 24th April 2008, Pakistan, India and Afghanistan signed a framework agreement pertaining to purchase of natural gas from Turkmenistan and eventually the agreement between the governments of the four countries was signed on 11th December 2010.

The recent past has witnessed unprecedented gas shortage in Pakistan. The hours of load shedding are on a precipitous ascent and there is a dire need for an amelioration act to drag the country out of this quagmire. According to statistics, the demand for natural gas in Pakistan has risen by almost 10 per cent between 2000 and 2008, and clocking around 3,774 mmcfd, compared to the total production of 3,200 at the time.

However, the gas demand has escalated over the past three years, with numbers as high as 4,731 mmfcd cubic being posted, whereas the production was 4,528 mmfcd – a gap of 203 mmfcd. Even so, the cleavage between demand and supply has been on the rise and seriously intimidating numbers have been posted over the past couple of years. A source of natural gas was vital to improve the current scenario of power shortage and load shedding.

US has made it unambiguous that it would rather see Pakistan pursue the TAPI project than the Iran-Pakistan gas pipeline project, owing to the multitude of issues it has on the Iranian front. US sees it as an interesting strategic venture in South Asia, with all major players and stakeholders being linked via this pipeline.

The word is that once the project takes definitive shape, the US companies would eventually jump in the project making it more economically feasible for the Pakistani hierarchy and hence dispelling the vociferous clamour in favour of the IP project. It has been unanimously understood that Pakistan would opt for TAPI in lieu of IP owing to its appeasement plan for the ever-escalating domination of US in the region.

With the opulence of Central Asia in terms of natural resources being an open secret, TAPI is a major step towards linking that particular zone with the rest of the world through the sub-continent. The opening up of this route via Afghanistan and Pakistan would allow the Central Asian states to export energy, to the west without traversing the Russian realm or depending on Russian routes.

And with American influence over the Afghanistan-Pakistan region indubitable, this maneuver would eventually give access to US designs of usurping the Central Asian reservoirs and markets in what is now formally called as ‘The New Great Game’.

China has also struck a one-on-one gas import deal with Turkmenistan, and hence the price settled by the two countries would be a telling factor in determining the cost that Pakistan would have to pay in the running of this project. Reports tell that China has agreed upon $7.7/mmbtu, which is quite expensive by any standards.

Also, considering Pakistan’s endeavours to negotiate the price with Iran over the price settled in the IP project, which was considerably less than the numbers being flaunted here , and TAPI borders on a costly affair. Owing to the security premium and the linkage cost in TAPI deal pundits believe that Pakistan might have to eventually pay up to $11-12/mmbtu – 50 per cent more than our Chinese counterparts.

Considering the perpetual battlefield that Afghanistan has become, any project that traverses that war-hit turbulent zone cannot be labeled as ‘lucrative’ without some serious contemplation. The chaos surrounding any move from, within or relating to Afghanistan would also be a massive cause of skepticism.

And hence if one is linked to such a project that has its heart in Afghanistan and the major chunk of the route passes through that chaotic zone, it does nourish the Doubting Thomas and his cynical voice. Couple this with the fact that we are paying hefty bucks for a venture that might eventually be seriously dented.

The noise engulfing the project in our neck of the woods is not one of buoyancy. It is the general consensus that by pursuing TAPI instead of IP, the Pakistani hierarchy is merely acquiescing to the US demands and going for something that would eventually cost quadruple the amount of IP project.

Add the aforementioned Afghan question into the mix and one ponders over the raison d’être behind such a move. The move might end up being imprudent profligacy on the government’s part and might end up being criminal wastage of public money.

With the current plethora of issues related to power shortage marring the entire nation, any glimmer of hope is welcome. But, with the IP project running parallel to the TAPI project, the juxtaposition is inevitable.

Considering the fact that IP is considerably less costly than TAPI, the question marks over the feasibility of the pipeline project originating from Turkmenistan become all the more conspicuous. Add the fact that it’s actually Uncle Sam who wants to dictate our matters and wants us to opt for the TAPI instead of the more economically feasible and evidently the more lucrative IP; the cause for scepticism might outweigh the cause for optimism.