Work to speed up on Central Asia gas pipeline

Pakistan, Afghanistan, and Turkmenistan have agreed to accelerate work on a stalled gas pipeline project and have asked the CentGas consortium to find a project leader to replace Unocal Corp.

The three countries have agreed to overcome "expeditiously" all problems related to building the $1.9 billion, 1.9 bcfd, 1,400-km pipeline from Turkmenistan's Daulatabad gas fields to Multan. According to Pakistan Petroleum Minister Nisar Ali Khan, the three countries "have resolved that the project will continue," the minister told reporters after signing a tripartite agreement recently. "We have agreed on a 3-month timetable to activate this project."

Although CentGas signed agreements with Turkmenistan to build the pipeline, it delayed work because of factional fighting in Afghanistan.

CentGas rival Bridas Sapic, Buenos Aires, said at the end of last year that it would not wait for peace to start laying the Afghan portion of the line, if awarded the contract (OGJ, Jan. 4, 1999, Newsletter). But the Taliban government in Afghanistan has not signed a contract with Bridas, which has pursued the project for 3 years.

CentGas

The three governments are seeking a partner for the CentGas consortium to replace project leader Unocal, which withdrew last November, Nisar said.

Unocal originally held a 54.11% share in the project. Turkmenistan's government holds 7%. Other CentGas participants include Saudi Arabia's Delta Oil 15%, Japan's Itochu Corp. and Inpex 7.22% each, South Korea's Hyundai Engineering & Construction Co. 5.54%, and Pakistan's Crescent Group 3.89%.

"We have asked CentGas to find a leader in 3 months," Nisar said. "The project leader can either be from CentGas itself or from outside."

Unocal withdrew from the project, saying the Taliban government in Afghanistan must first be recognized by the United Nations and the U.S., and peace must return to that country, which has suffered about 20 years of civil war.

Unocal's withdrawal had given the impression that the project had collapsed, but the three countries have decided to carry it forward, even if the Afghan government is not recognized and financing is not available through conventional channels, Nisar said.

Project options

Officials from the three countries had agreed that, in a "worst-case scenario," the project might be split in three parts, with each country responsible for the segment of pipeline within its territory, he said.

The pipeline would extend 764 km in Afghanistan, about 500 km in Pakistan, and the rest in Turkmenistan. The Taliban government controls more than 90% of Afghanistan territory, but the government is recognized only by Pakistan, Saudi Arabia, and the U.A.E.

Daulatabad is among the world's largest gas producing areas and is thought to be capable of producing 1.5 bcfd or more for 30 years.

If the pipeline project materializes, it would serve as a catalyst for several other, similar oil and gas pipeline projects in the region, with benefits for Central Asia and South Asia, the minister said.

"We strongly feel that it will serve as a window through which South Asia will get connected to Central Asia," he said.

The next meeting of the three countries will be held in the Turkmen capital of Ashgabat in July.