[R-G] The Oil Game in Afghanistan

[Jay Moore]

Peace in Afghanistan could open door for regional gas pipelines
DUBAI, Oct 11 (AFP) -

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 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.