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Peace in Afghanistan could open door for regional gas pipelines Agence France Presse October 11, 2001 Thursday

DUBAI, Oct 11
A peaceful resolution to the Afghan crisis could open the door up to Western oil companies seeking lucrative projects to construct pipelines transporting gas from the Caspian Sea and central Asia, experts say.

"The energy map of central Asia and Afghanistan is about to be redrawn,"

The reserves in the Caspian and central Asia are not as large as those of the Gulf, which accounts for 65 percent of the world total, but "they could become a small 'Gulf of Mexico'," said Naji Abi Aad, an oil expert at the Observatoire Mediterraneen de l'Energie in France.

He was referring to Mexico's off-shore reserves, exploited at a huge cost in an effort to diversify world supplies and reduce dependence on a region as troubled as the Middle East. "Peace in Afghanistan would allow numerous projects to go ahead, taking oil and gas from the Caspian, Turkmenistan and Kazakhstan to Pakistan, India and other markets," said Abi Aad.

The West would benefit from these projects because they would avoid having to use long, costly and politically risky transport by road across Iran, the Caucasus and Russia, he said.

"The economic impact on Gulf producers would be minimal, but they would see their influence on the market diminish in the short term.

"But the Caspian will not be a long-term rival, as its reserves represent only 1.7 percent of the world total," Abi Aad said.

Some oil experts attribute, in part, the cool reception Saudi Arabia afforded US-led strikes on Afghanistan's ruling Taliban regime to vested oil interests.

Saudi firm Delta Oil, headed by a relative of the ruling family, Sheikh Badr bin Mohammad al-Aiban, acquired a majority share in Afghanistan's Centgas consortium in 1998 after the withdrawal of US company Unocal in protest at the Taliban's treatment of women.

A planned 2-billion-dollar, 1,400-kilometre-long (870 miles) gas pipeline from Turkmenistan to Pakistan via Afghanistan, to be built by the Centgas consortium was shelved in 1999 amid fears of political unrest and low oil prices.

Delta Oil had resumed negotiations with the Taliban to complete the project, and experts say the end of the Islamic militia could spell the start of more lucrative opportunities for Western oil companies.

"The energy map of central Asia and Afghanistan is about to be redrawn," said Michael Ritchie, editor of the London-based Neftecompass magazine.

"A semblance of security and stability in the region could reopen the door to Western investors to again examine oil and gas pipeline projects aimed at unblocking countries like Turkmenistan," he said. "But the scenario remains a long-term one."

All oil exploration and development work in Afghanistan was halted after the Soviet invasion in 1979. The country's provinces received refined products from neighbouring countries.

Soviet estimates in the 1970s placed the country's proven oil reserves at about 95 million barrels, and proven gas reserves at 145 billion cubic metres (5 trillion cubic feet).

Oil was locally produced near the northern city of Sherberghan from four wells initially established by the Soviet Union during its 1979-89 occupation of the country. Refining was, however, limited.