Afghan gas pipeline nears reality
If all goes well this week, Afghanistan may soon be on its way to having a gas pipeline going through its territory.
The ninth meeting of oil ministers for Turkmenistan, Afghanistan, and Pakistan started Tuesday in Ashkabad, Turkmenistan's capital. And according to Afghan officials, the three countries are closer than ever to a deal.
"When I met with the Turkmenistan vice president, and with [Afghan President Hamid] Karzai, and with President Pervez Musharraf, they all said this is a very good project, and it will have a good effect on the regional economy," says Mir Sediq, Afghanistan's minister for mines and industry.
Even India is interested in the project, and Indian officials will be attending the Ashkabad meeting as observers. "Manmohan Singh told me, 'We have a population of 1.3 billion people, and we cannot continue to grow without power," says Mr. Sediq. "One or two pipelines are not enough. We'll need three or four.' "
From the time it was first proposed in the early 1990s, after the fall of the Soviet Union, the 1,000-mile-long Turkmenistan-Afghanistan-Pakistan pipeline project, or TAP, has always had a certain unrealistic aura to it. Clearly Pakistan has a growing need for energy. Just as clearly, Turkmenistan has a lot of natural gas. The dilemma has always been Afghanistan: Would you put a gas pipeline through a country with a raging civil war?
For much of the 1990s, American oil company Unocal answered "yes," and hired Afghan consultants - such as the soon-to-be president Hamid Karzai; soon-to-be US ambassador to Kabul, Zalmay Khalilzad; and soon-to-be minister of Mines and Industry Sediq - to help negotiate with tribal chiefs and militia warlords. Eventually, Unocal shelved the project, in part because of the Taliban's intransigence, and in part because of pressure from human rights groups for trying to do business with them.
But with the fall of the Taliban in late 2001, and the support of foreign forces to keep relative peace, Afghanistan has suddenly turned into a "safe" investment choice, at least from the perspective of the oil industry. That is the assessment of the Asian Development Bank, which recently commissioned a study that gave its support to the TAP. Security is an issue, the ADB report says, but an issue that can be resolved with a few protective measures.
Then there's Pakistan: Will it be able to consume enough of Turkmenistan's gas for the project to be viable? At the time the TAP was first proposed, Pakistan's economy was growing at 4.5 percent a year. Today, its growth rate is estimated at 8.5 percent. Pakistani energy officials estimate that they will run out of domestic gas supplies in 2010.
The final cost of the project is currently estimated at $3.7 billion, up from the $2.5 billion price tag estimated in the 1990s. Unocal is now out of the picture, replaced by Argentine energy company Bridas.
For Afghanistan, this project could be a welcome source of jobs and income. After the three-year construction period, annual revenue for the Afghan government would reach around $350 million to $450 million.
This is less than the $2.2 billion in Afghanistan's illicit opium economy, but it has the advantage of being clean.