By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
Afghanistan pushes $10 billion gas pipeline in Taliban heartland
Placeholder Image

Bloomberg News (TNS)

KABUL – It sounds good for Afghanistan on paper: Build a gas pipeline in about four years and start becoming financially self-sufficient after more than a decade of war.
In reality, the $10 billion Turkmenistan-Afghanistan-Pakistan-India pipeline involves transporting gas the distance from New York to Miami through a Taliban insurgency and the heavily guarded border of two nuclear-armed neighbors.
That’s not stopping Afghan President Ashraf Ghani, whose government plans to host a meeting in Kabul in May to revive the project first proposed in 1994. He needs cash to wean the nation off international aid as the U.S. withdraws most of its troops by January 2017.
“It’s an economic bridge to connect these countries,” Daud Shah Saba, Afghanistan’s mines and petroleum minister, said in a March 3 interview at his Kabul office. The pipeline “will be a tool to medicate lots of political problems, and at the same time it provides economic help for all of the countries.”
In May, the four countries will seek to agree on a company to lead a consortium, something they’ve failed to do since the Asian Development Bank was brought in to facilitate the project after the U.S. invasion in 2001. Once that happens, Saba said, it could be built within four years and help Afghanistan bring in as much as $300 million annually.
That would boost Afghanistan’s revenues by 15 percent, helping fill a budget gap that makes the country reliant on foreign aid for two-thirds of its expenditures. The U.S.’s top intelligence official said last month that the Taliban are set to gain this year and donor funds remain “the most important external determinant of the Kabul government’s strength.”
After taking power last year, Ghani said he’d look to use the landlocked country’s mineral wealth, which the government estimates at $3 trillion, to grow the economy. So far investment has been limited because of the security situation, Saba said, making the pipeline a top priority.
“It’s not only the construction, but also the maintenance that will create permanent jobs for the life of the project,” the minister said, adding that Afghanistan will buy about 16 percent of the gas from the pipeline.
Not everyone is optimistic it will happen soon. The governments and private-sector companies involved only have a “limited” chance of agreeing on a risk-sharing formula, according to Deepak Mahurkar, leader for oil & gas at PriceWaterhouseCoopers in India.
“Any aggressive timeline will be difficult to achieve,” he said by phone from Gurgaon outside of the Indian capital.
Turkmenistan, a former Soviet republic with the world’s fourth-biggest natural gas reserves, agreed on the pipeline with Pakistan in 1994. It would carry fuel from the Galkynysh gas field, which Turkmenistan says has the world’s second-largest reserves, across hundreds of miles of desert and mountain terrain.
When the Taliban took power in Afghanistan in 1996, Unocal Corp. flew one of the group’s leaders to Houston to negotiate. The project fell dormant two years later when Unocal, later acquired by Chevron Corp., exited because of low global oil prices and the presence of Osama bin Laden in Afghanistan.
India was invited to join after the ADB stepped in after the Taliban’s ouster. A decade of negotiations produced a company called Tapi Pipeline Company Ltd., in which each of the four countries involved contributed $5 million.
The ADB said in November it’s helping the consortium pick a company to build and operate the pipeline, which the U.S. sees as a more palatable alternative to a proposed Iran-Pakistan gas pipeline. The 1,735 kilometers (1,078 mile) TAPI pipeline is estimated to carry 33 billion cubic meters of gas per year – slightly less than what Pakistan consumes annually – over three decades.
While France’s Total SA has been reportedly considered to head the project, Turkmenistan refuses to allow foreign companies to hold a stake in local gas fields. Pakistan has proposed a consortium led by Russian, Chinese and Pakistani companies, The Express Tribune reported last week.
“We have reached the final stage and we will soon reach a conclusive decision,” Indian Oil Minister Dharmendra Pradhan told lawmakers on March 9. Total SA’s news office did not reply on Tuesday to phone calls and an e-mail request for details on their role in the gas pipeline project.
Ensuring security for the pipeline will be crucial: It will run along a highway in southern Afghanistan that has seen frequent attacks from the Taliban, which set up their capital in nearby Kandahar. It will then pass through Quetta in Pakistan before entering India via the border town of Fazilka.
If the project does get off the ground, it will help fulfill Afghanistan’s energy needs and help the country link a region where violence has hindered cooperation, according to Ahmad Masood, an economics professor at Kabul University.
“Afghanistan will play a central role as a land or economic bridge in connecting energy-rich central Asia to energy-deficient South Asia,” Masood said by phone. “The implementation of such a strategic project can direct the region’s and world’s attention onto us and improve accountability from the Afghan government and its allies.”