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Pak signs trilateral gas pipeline agreement

Pakistani, Afghan and Turkmen leaders agreed on Thursday to resuscitate an ambitious and long-standing dream of a $2 billion pipeline from gas fields in Turkmenistan through Afghanistan to Pakistan's Arabian Sea coast.

Analysts questioned the viability and security of the project but the three leaders said the end of more than two decades of fighting in Afghanistan meant conditions were finally right.

"Now with the gradual return of peace and normality in Afghanistan, we are confident that this mega project will be realised in the near future," said Pakistani President Pervez Musharraf, after signing an agreement on the deal with Afghan interim leader Hamid Karzai and Turkmen President Sapamurat Niyazov.

Niyazov, speaking through a translator, said the pipeline -- to carry 23 billion cubic metres of gas a year -- would bring jobs and $300 million a year in transit fees to Afghanistan.

It is still early days for the project. A feasibility study conducted by US oil company Unocal in the 1990s has to be updated, the project put out to tender and financial backing secured for the 1,500-km (930-mile) pipeline.

SECURITY QUERIED

Analysts questioned whether Afghanistan was stable enough for the project to go ahead.

"Two billion dollars for a 1,500-km line is pretty cheap and means it is either overland or just under the surface. It will be very vulnerable to attack," said one regional gas analyst.

Although security in Afghanistan has improved since Karzai took over in December after the fall of the Taliban, warlords still control large parts of the country and tensions remain between the country's diverse tribes.

Jonathan Stern, a leading independent gas consultant based in London, said the project made no commercial sense.

"The cost of the project means customers for the gas would have to pay a price way in advance of what they are paying for gas now," said Stern. "They need to find big industry and power generating buyers who are prepared to pay that price and that doesn't look possible at the moment."

Musharraf said he hoped the World Bank or the Asian Development Bank would support the pipeline, which would be an economic lifeline to all three countries.

"This project, on completion, will provide the shortest route for the export of hydrocarbon resources from Central Asia to Far East, Japan and the West," Musharraf said.

GREAT GAME REVIVED

Despite the scepticism, the three leaders know the dream of a pipeline to tap into the vast oil and gas reserves of Central Asia is a potent one.

Unocal fought a long battle with Argentina's Bridas Corporation for the rights to build the pipeline in the 1990s, but finally withdrew in 1998 because of the fighting in Afghanistan.

The battle of the two firms was part of what was dubbed "the new Great Game" -- a throwback to the 19th century battle between Britain and Russia for control and influence in Central Asia.

Musharraf said the three countries also agreed to improve their road and air links and reduce trade barriers between them.

The proposed pipeline would run from Daulatabad gasfield in Turkmenistan to Gwadar in southwestern Pakistan, where work has just started on a new port with the backing of the Chinese government. Musharraf said a plant would be constructed at Gwadar to liquefy the natural gas for export.

And he said he would be prepared to run a pipeline from Iran through Pakistan into India to tap into the huge market there, despite the current military standoff between Pakistan and India that has brought the nuclear rivals close to war.

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