Thursday, March 15, 2012

Is The TAPI Gas Pipeline At Risk?

Mr. MARESCA. Congressman, I am not here to defend the Taliban. That is not my role. We are a company that is trying to build a pipeline across this country.

At Unocal, we believe that the central factor in planning these pipelines should be the location of the future energy markets that are most likely to need these new supplies. Western Europe, Central and Eastern Europe, and the Newly Independent States of the former Soviet Union are all slow growth markets where demand will grow at only a half a percent to perhaps 1.2 percent per year during the period 1995 to 2010.

Asia is a different story all together. It will have a rapidly increasing energy consumption need. Prior to the recent turbulence in the Asian Pacific economies, we at Unocal anticipated that this region's demand for oil would almost double by 2010. Although the short-term increase in demand will probably not meet these expectations, we stand behind our long-term estimates.

I should note that it is in everyone's interest that there be adequate supplies for Asia's increasing energy requirements. If Asia's energy needs are not satisfied, they will simply put pressure on all world markets, driving prices upwards everywhere.

The key question then is how the energy resources of Central Asia can be made available to nearby Asian markets. There are two possible solutions, with several variations. One option is to go east across China, but this would mean constructing a pipeline of more than 3,000 kilometers just to reach Central China. In addition, there would have to be a 2,000-kilometer connection to reach the main population centers along the coast. The question then is what will be the cost of transporting oil through this pipeline, and what would be the netback which the producers would receive.

For those who are not familiar with the terminology, the netback is the price which the producer receives for his oil or gas at the wellhead after all the transportation costs have been deducted. So it's the price he receives for the oil he produces at the wellhead.

The second option is to build a pipeline south from Central Asia to the Indian Ocean. One obvious route south would cross Iran, but this is foreclosed for American companies because of U.S. sanctions legislation. The only other possible route is across Afghanistan, which has of course its own unique challenges. The country has been involved in bitter warfare for almost two decades, and is still divided by civil war. From the outset, we have made it clear that construction of the pipeline we have proposed across Afghanistan could not begin until a recognized government is in place that has the confidence of governments, lenders, and our company.

Mr. Chairman, as you know, we have worked very closely with the University of Nebraska at Omaha in developing a training program for Afghanistan which will be open to both men and women, and which will operate in both parts of the country, the north and south.

Mr. Chairman, as you know, we have worked very closely with the University of Nebraska at Omaha in developing a training program for Afghanistan which will be open to both men and women, and which will operate in both parts of the country, the north and south.

Unocal foresees a pipeline which would become part of a regional system that will gather oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia. The 1,040-mile long oil pipeline would extend south through Afghanistan to an export terminal that would be constructed on the Pakistan coast. This 42-inch diameter pipeline will have a shipping capacity of one million barrels of oil per day. The estimated cost of the project, which is similar in scope to the trans-Alaska pipeline, is about $2.5 billion.

Given the plentiful natural gas supplies of Central Asia, our aim is to link gas resources with the nearest viable markets. This is basic for the commercial viability of any gas project. But these projects also face geopolitical challenges.
Unocal and the Turkish company Koc Holding are interested in bringing competitive gas supplies to Turkey. The proposed Eurasia natural gas pipeline would transport gas from Turkmenistan directly across the Caspian Sea through Azerbaijan and Georgia to Turkey. Of course the demarcation of the Caspian remains an issue.

Last October, the Central Asia Gas Pipeline Consortium, called CentGas, in which Unocal holds an interest, was formed to develop a gas pipeline which will link Turkmenistan's vast Dauletabad gas field with markets in Pakistan and possibly India. The proposed 790-mile pipeline will open up new markets for this gas, traveling from Turkmenistan through Afghanistan to Multan in Pakistan. The proposed extension would move gas on to New Delhi, where it would connect with an existing pipeline. As with the proposed Central Asia oil pipeline, CentGas can not begin construction until an internationally recognized Afghanistan Government is in place.

Mr. MARESCA. First, on the question about Afghanistan, of course we're not in a phase where we are negotiating on a contract because there is no recognized government really to negotiate with. However, we have had talks and briefings with all the factions. It is clear that they all understand the significance for their country of this pipeline project, and they all support it, all of them. They all want it. They would like it to start tomorrow. All of the factions would like it to start tomorrow if we could do it.

So I believe that over time, if it's built, it would be secure. I believe that the Afghans will see it as a national asset once it's built. It will provide them with many millions of dollars in transit fees. It will provide them with real jobs and technology and a lot of other things.

Mr. BEREUTER. Mr. Maresca, if I could just interrupt here. Why wouldn't you have the situation whereby whoever is in power drawing resources from that pipeline would find that their adversaries would decide to damage their resource base and stop the flow?

Mr. MARESCA. It's not going to be built until there is a single Afghan Government. That's the simple answer. We would not want to be in the situation where we became the target of the other faction. In any case, because of the financing situation, credits are not going to be available until there is a recognized government of Afghanistan.

It's my pleasure now to turn to my colleague from California, Mr. Rohrabacher, for any questions he may have.

Mr. ROHRABACHER. I am reminded of a joke where God is asked when peace will come to the Middle East. He says, ''Not in my lifetime.'' I am afraid that this may well be true of Afghanistan as well. In fact, I am more hopeful right now, having just returned from one trip to the Middle East and another trip to Central Asia that there is a greater chance for peace between Israel and its neighbors than there is for peace in Afghanistan. And I know Afghanistan probably better than anyone else in the Congress. I hate to tell you that.

But let me ask a few questions. So there will be no pipeline until there is an internationally regionized government and a government that is recognized by the people of Afghanistan too, I would imagine that you wanted to put that caveat on it. Right? It's not just internationally recognized, but it has to be accepted by the people of the country. Right?

Mr. MARESCA. It depends on who you mean by the people. I assume that no matter what government is put in place, there will be some people who are opposed to it.

Mr. ROHRABACHER. I found something here. There seems to be a little attachment onto there that may be a little more controversial than people understood when they first heard what you were saying. So the government doesn't necessarily have to be acceptable to the people of Afghanistan as long as it's internationally recognized?

Mr. MARESCA. Of course it has to be accepted by the people. What I mean is that there will always be factions in Afghanistan. There certainly will be factions even when a single government is formed. But when a government is formed that is recognized internationally, it will certainly have to be recognized by the people, yes.

Mr. ROHRABACHER. The current government of Afghanistan or the current group of people who hold Kabul, I guess is the best way to say that, and about 60 percent of the country are known as the Taliban. What type of relationship does your company have to the Taliban?

Mr. MARESCA. We have the same relationship as we have with the other factions, which is that we have talked with them, we have briefed them, we have invited them to our headquarters to see what our projects are.


Mr. MARESCA. These are exactly the same things we have done with the other factions.

Mr. ROHRABACHER. However, the Taliban, who are now in control of 60 percent of Afghanistan, could you give me an estimate of where the opium that's being produced in Afghanistan is being produced? Is it in the Taliban areas or is it in the northern areas of Afghanistan?

Mr. MARESCA. I can't tell you precisely, but I think it's being produced all over Afghanistan.

Mr. ROHRABACHER. Yes. To be precise, it's being produced in the Taliban areas. You are talking to someone who has studied it. Whether there is some minor amount of heroin and opium being produced in the other areas is debatable. There is some obviously being produced everywhere, but the major fields that are being produced are in the Taliban-controlled areas.

What about the haven for international terrorists? There is a Saudi terrorist who is infamous for financing terrorism around the world. Is he in the Taliban area or is he up there with the northern people?

Mr. MARESCA. If it is the person I am thinking of, he is there in the Taliban area.

Mr. ROHRABACHER. Right. And in the northern area as compared to the place where the Taliban are in control, would you say that one has a better human rights record toward women than the other?

Mr. MARESCA. With respect to women, yes. But I don't think either faction here has a very clean human rights record, to tell you the truth.
48–119 CC








FEBRUARY 12, 1998

Printed for the use of the Committee on International Relations

Key milestone reached on TAPI gas pipeline
Turkme­nistan leader to discus­s TAPI projec­t which the US is pushin­g Pakist­an to adopt instea­d of Iran's gas pipeli­ne.
Published: November 14, 2011


The joint declaration of the tripartite summit held in Islamabad recently has raised many an eyebrow especially in Washington. In particular, the presence of Iranian President Ahmedinejad was an eyesore to US policymakers. However, the People’s Republic of China has, without mincing words, termed the summit a good omen for peace in the region. Its Foreign Ministry Spokesperson, Hong Lee said at a briefing session that the meeting of the three heads of states including Pakistan, Afghanistan and Islamic Republic of Iran would pave the way for ensuring stability in their respective countries besides contributing to ensuing peace in the region. In his view the summit has provided a forum where the member states could establish contacts with regular intervals. Iran and Pakistan have currently been engaged in negotiating early commissioning of the gas pipeline project and the two sides have also expressed their desire of early commissioning of the project that would benefit people of the two countries. But this idea has consistently been opposed by the United States on one pretext or another. American ambassador to Pakistan, Cameron Munter has, in a public statement, said Pakistan seeking import of gas from Iran was not a good idea. In fact, the US Administration has all along been wishing Islamabad would drop this idea and go for the TAPI pipeline instead. Washington has successfully persuaded India, which was a partner in the project initially to opt out.

TALIBAN STATEMENT: "Similarly the Afghan issue has two main dimensions; one is internal and the other external. The external dimension is associated with Americans and the internal dimension is connected with the Afghans themselves. Until and unless the external dimension is settled which rests entirely in the hands of the foreigners, discussing the internal dimension is meaningless and is nothing more than a waste of time. Therefore the Islamic Emirate considers talking with the Kabul administration as pointless."

DAWOOD AZAMI: The presence of foreign forces is the external part of the problem. The Taliban believe that once they are out, only then can the Taliban, and all the other factions inside Afghanistan talk about the future of their country.
Wielding soft power: US offers to finance TAPI gas pipeline
Asian Develo­pment Bank become­s a transa­ction advise­r for the initia­tive.
By Zafar Bhutta
Published: December 19, 2011

The US has made a generous offer to finance the multibillion-dollar Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, an implicit gesture to lure Pakistan away from the Iran-Pakistan (IP) gas pipeline deal.

Addressing students of Lahore University of Management Sciences (LUMS) on November 25, US ambassador to Pakistan Cameron Munter had termed Pakistan-Iran gas pipeline deal unfeasible. A viable alternative, in his view, was the Turkmenistan-Afghanistan- Pakistan-India (TAPI) pipeline project via Afghanistan.

In the $7.5 billion TAPI gas pipeline project, Pakistan’s share will be 1.35 billion cubic feet per day (bcfd) out of a total of 3.2 bcfd gas exports from Turkmenistan.

Asian Development Bank (ADB) has also become a transaction adviser for TAPI gas pipeline project, raising funds for it by forming a consortium of leading lenders.

Although Pakistan and Turkmenistan have signed the Gas Sales Purchase Agreement (GSPA) on TAPI project, the two countries are yet to take a final decision on it.

Sources inform The Express Tribune that the Export-Import Bank (EIB) of the United States as well as the Overseas Private Investment Corporation (OPIC), an “independent” US agency, have offered Pakistan financing for TAPI. “As Pakistan has welcomed the offer, Pakistani and US authorities were scheduled to discuss it on the sidelines of the Bonn conference,” sources asserted, adding that the discussions could not take place due to the subsequent boycott of the moot by Islamabad.

Petroleum Secretary Ijaz Chaudhry, however, asserted that he had no knowledge of any financing offer by the US for the TAPI gas pipeline project.

“After finalising gas price, the approval of Economic Coordination Committee (ECC) would be sought to sign the final GSPA with Turkmenistan,” he added.

Pakistan is yet to finalise transit fees with neighbouring Afghanistan and India.

According to sources, the Minister for Petroleum and Natural Resources is expected to leave for New Delhi next month to hold talks with his Indian counterpart after transit fee is finalised with Afghanistan.

Three options are under consideration for transit fee on gas imports.

The first deals with fixing it on transmission of gas from Turkmenistan. The second one includes linking it with the length of gas pipeline. The third option may involve taking into account the volume of gas to be consumed by each country.
War, Pipelineistan-style
Pepe Escobar

United States Secretary of State Hillary "We came, we saw, he died" Clinton's message to Pakistan was stark; try to go ahead with the IP (Iran-Pakistan) gas pipeline, and we're going to take you out financially.

Islamabad, its economy in tatters, living in power-cut land, and desperate for energy, tried to argue. Pakistan's top official in the Petroleum and Natural Resources Ministry, Muhammad Ejaz Chaudhry, stressed that the 2,775-km, $1.5 billion IP was absolutely crucial for Pakistan's energy security.

That fell on deaf ears. Clinton evoked "particularly damaging" sanctions - tied to Washington's push to isolate Iran by all means available and the no-holds-barred campaign to force particularly
India, China and Turkey to cut off their imports of Iranian oil and gas.

So as Washington has been impotent to disrupt Pipelineistan moves in Central Asia - by isolating Iran and bypassing Russia - it's now going ballistic to prevent by all means the crucial integration of Southwest Asia and South Asia, from Iran's giant South Pars gas field to Pakistan's Balochistan and Sindh provinces.

IP, it should be remembered, is the original, $7 billion IPI; Iran-Pakistan-India, also known as the "peace pipeline". India dropped out in 2009 after non-stop harassment by the George W Bush and then Barack Obama administrations; India was offered access to civilian nuclear technology.

China, for its part, is still eyeing the possibility of extending IP out of Gwadar port, then crossing to Pakistan's north alongside the Karakoram Highway all the way to Xinjiang. China is already helping Islamabad to build civilian nuclear reactors - as part of Pakistan's energy security policy.

ICBC, China's largest bank and the world's number one lender, was already positioned as financial adviser to IP. But then, contemplating the (sanctions) writing on the wall, it started to "show less interest", as Islamabad chose to spin it. Is ICBC totally out? Not exactly. At least according to the Pakistani Ministry of Petroleum's spokesman, Irfan Ashraf Qazid; "ICBC is still engaged in the IP project and the negotiations are still going on."

A mega-bank such as ICBC, with myriad global interests, may be wary of defying the Washington sanction machine; but other financing options may be found, as in other banks or government-level agreements with China or Russia. Pakistan's Foreign Minister Hina Rabbani Khar has just made it very clear. Pakistan badly needs gas that should start flowing by December 2014.

Islamabad and Tehran have already agreed on pricing. Iran's 900-km stretch of IP is already built; Pakistan's is starting, via ILF Engineering from Germany. Iran's IRNA agency said Pakistan has announced that the IP is still on; predictably, Western media spin is that the Chinese got scared and backed out.
IPC, anyone?

For Washington, the only way to go is another Pipelineistan gambit - the perennially troubled TAPI (Turkmenistan-Afghanistan-Pakistan-India). Even assuming it will find financing; even assuming the Taliban will be taking their cut (that was, in fact, why negotiations between them and the Bill Clinton then Bush administrations failed); and even assuming it would not be bombed routinely by mujahideen, TAPI would only be ready, optimistically, by 2018. And Islamabad simply can't wait that long.

Predictably, Washington's anti-IP campaign has been relentless - including, of course, shadow war. Islamabad is convinced that the CIA, the Indian intel agency RAW, the Israeli Mossad and the British MI-6 have been actively conspiring to get some sort of Greater Balochistan to secede from the central government. They have been, a la Libyan model, financing and weaponizing selected Baloch fighters. Not because they love their independent spirit - but as a means to balkanize Pakistan.

To compound Washington's fury, "isolated" Iran, by the way, is about to start exporting an extra 80,000 barrels of oil a day to Pakistan; and has already committed $250 million to the Pakistani stretch of IP.

This has got the potential of becoming much, much uglier. Washington won't be deterred from its intent to smash IP. For an Iran under pressure and a strangled Pakistani economy - as well as China - this is all about the Asian Energy Security Grid.

ICBC may be out - sort of. But the whole thing could become even juicier if Beijing decides to step in for good, and turn it from IP to IPC. Will Washington have the guts to defy Beijing head on?

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at
So, you can see that the sanctions on Iran have nothing to do with a newk threat, and the effort to install a government in Afghanistan and the resulting war has nothing to do with terrorism, but is a land grab to install a gas pipeline for a private company.

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