Afghanistan Eyes a Pipeline, But Prospects Look Dim

With American-led military operations diminishing in Afghanistan and foreign aid taking a long time to flow, the country is looking for ways to fuel a struggling economy. Under interim government Chairman Hamid Karzai, Afghanistan has revived an old hope. It is officially seeking to build a pipeline that would take Turkmen oil and gas to India via Pakistan and Afghanistan.

Karzai traveled to Islamabad on May 30 to meet with Pakistani President Pervez Musharraf and Turkmen President Saparmyrat Niyazov. The three leaders agreed only to pursue financiers for the pipeline project. They could not promise to succeed where others with deeper pockets have failed. Karzai's "pipeline of peace" would essentially reassemble the CentGas Consortium, a $2 billion project led by Houston oil giant Unocal in the mid-1990s. If it develops, it could bring in hundreds of millions of dollars to Afghanistan, which desperately needs funds for reconstruction. However, regional conditions have changed significantly since Unocal dissolved the CentGas Consortium in 1998. Beyond Afghanistan's devastation, Pakistan's energy needs and its relations to India have changed, making a trans-Afghanistan pipeline largely a fantasy.

For one thing, Western energy companies face many opportunities to invest their money elsewhere. Azerbaijan and Kazakhstan, which have somewhat more stable structures than Afghanistan, have raised millions in oil and gas investments. Competition for foreign investment is tight even with countries with stable central governments. So it may be that no multinational company has publicly shown interest in reviving Unocal's pipeline plans because those plans would simply not pan out economically. "There is no new interest right now in the area," said Leonard Coburn, Director of the Office of Newly Independent States, Russian and Middle Eastern Affairs at the US Department of Energy. "ExxonMobil is pulling out of Turkmenistan. They didn't find anything and they feel that they cannot operate there. Chevron Texaco has not really looked into Turkmenistan because they are pretty tied up in Pakistan and Azerbaijan,"

Although still favored by the participant countries to revive the project, Unocal Spokesperson Terry Covington says that the company does not have any plans or interest in another pipeline project through Afghanistan. She says that after the company withdrew from the CentGas consortium in 1998, they invested their capital in other parts of the world, specifically in Southeast Asia. "We can't make any decisions based on a snapshot of a country," Covington told EurasiaNet. "There are several things we look for before we invest in a country: an internationally recognized government, peace and stability, and social [standards]."

Karzai should be familiar with Unocal; he worked as a consultant to the company in the