More on Afghan pipelines

jonathan flanders jon_flanders at compuserve.com
Mon Sep 24 07:54:30 MDT 2001


The following article dates from late 1997, just before the Unocal-Taliban
deal was struck for the pipeline between Turkmenistan across Afghanistan to
Pakistan. In it a Unocal spokesman makes the economic case for the project.
As we now know, this deal blew up  with the Embassy bombings in Africa in
1998. But that was then.

I am working on putting all the information on the web on this subject
together in some sort of intelligible form.  Given the sheer mass of
documentation available, the mendacity and laziness of the average US media
outlet boggles the mind.

Jon Flanders

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11/25/97
CASPIAN PIPELINES & AFGHANISTAN
JOAN BEECHER
WASHINGTON

Last week, top government officials and oil company executives from the
United States, Turkey, Great Britain, Russia, Azerbaijan, and Central Asia
met to discuss an issue of great mutual concern: Pipeline routes for
Caspian oil and gas. Many export routes for the landlocked region's energy
resources have been proposed, and they all have serious drawbacks as well
as advantages. Supporters of a proposed pipeline through Afghanistan argue
that its advantages outweigh its drawbacks.

The most obvious drawback of a proposed pipeline from Turkmenistan, through
Afghanistan, to Pakistan and down to the Arabian Sea is that there is still
a civil war going on in Afghanistan.

Nevertheless, all factions in the civil war have signed agreements
supporting the proposed pipeline, according to Bob Todor, executive vice
president of Unocal, the company that is leading an international
consortium to construct the central Asian pipeline through Afghanistan.

Speaking to the international conference, Mr. Todor argued that the basic
problem with the existing and proposed western routes, across northern
Russia, or to ports on the Black Sea, or under the Caspian and down to
Turkey, is that they all lead to European markets:

"Western Europe is a tough market. It is characterized by high prices for
oil products, an aging population, and increasing competition from natural
gas. Furthermore, the region is fiercely competitive. It is now being
serviced by fields of course in the Middle East, the North Sea,
Scandinavia, and Russia... Although there is room for Central Asia's oil,
on the whole, it [western Europe] is not a very attractive market, because
substantial infrastructure will have to be developed to bring that oil from
the Caspian to the Western European market, and that market is very
competitive."

Much the same is true of Eastern Europe and the countries of the former
Soviet Union, according to Mr. Todor. But Asia is a completely different
story. Many speakers, not just Mr. Todor, argued that Asia will be the
fastest growing market for Caspian oil, even if the region's present
financial crisis should lead to a prolonged economic slowdown.

Three routes to Asian markets have been proposed: Through China, through
Iran,and through Afghanistan to Pakistan.

In Mr. Todor's view, the proposed China route is too long, and will
probably prove to be prohibitively expensive. The major argument against
the Iran route is, quite simply, that the U.S. government opposes it.

Among the many advantages of the Afghanistan route, according to Mr. Todor,
is that it would terminate in the Arabian Sea, which is much closer than
the Persian Gulf or northern China to key Asian markets:

"There is tremendous international and regional political will behind the
pipeline. The pipeline is beneficial to Central Asian countries because it
would allow them to sell their oil in expanding and highly prospective
Asian markets. The pipeline is beneficial to Afghanistan, which would
receive revenues from transport tariffs.... On a regional level, the
pipeline will promote stability and encourage trade and economic
development between South Asia and Central Asia. Finally, because of the
combination of short pipeline distance and the relatively low cost of
tankerage, this southern route will result in the most competitive export
route to the Asia/ Pacific market."

Yet construction of this promising route can only begin if and when an
internationally recognized government is formed in Afghanistan. A question
from the audience betrayed a certain skepticism about that outcome. Todor
was asked which do you think will occur first, an end to the civil war,
followed by widespread international recognition of the Taleban, or a
change in U.S. policy towards Iran?.

Mr. Todor responded that it was not his business to speculate about
politics. He advised concentrating on the market, and letting market
considerations dictate the best route for Caspian oil. And in his view,
that route will prove to be the one through Afghanistan.
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