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3.2B Afghan Pipeline Deal Imminent

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posted on Dec, 27 2002 @ 06:49 AM

ASHGABAT, Turkmenistan (AP) - Leaders from Afghanistan, Pakistan and Turkmenistan met Thursday to work out the final details of an ambitious deal to build a gas pipeline through war-ravaged Afghanistan.

The long-delayed $3.2-billion natural gas pipeline, known as the Trans-Afghanistan Pipeline, would carry gas from energy-rich Turkmenistan to Pakistan. It would be one of the first major investment projects in Afghanistan in decades.

The project promises to give an economic boost to Afghanistan but lacks solid financial backing. Investors are leery of the risks of doing business in a country where U.S.-led coalition forces are still hunting down remnants of Taliban and al-Qaida fighters.

Turkmen President Saparmurat Niyazov welcomed Afghan President Hamid Karzai Pakistani Prime Minister Zafarullah Khan Jamali to his marble working residence in the Turkmen capital Ashgabat for the two-day meeting. Huge portraits of the three leaders hung outside the palace.

The meeting is to culminate Friday in the signing of a framework agreement defining legal mechanisms for setting up a consortium to build and operate the pipeline.

The pipeline would pump hundreds of millions of dollars into Afghanistan's ruined economy and create 12,000 jobs there.

Pakistan would get more than $300 million in transit fees annually and gain access to the gas.

Turkmenistan, which possesses the fifth largest gas reserves in the world, would get a badly needed alternative route for gas exports. In 1994 Russia refused to transport gas from this former Soviet republic via the pipelines running through its territory.

``Once the contract is signed tomorrow, different private companies and consortiums can take interest in the project should there be interest in it,'' said Afghan Foreign Minister Abdullah. ``It is a project which is good for prosperity of all three countries.''

The Asian Development Bank is carrying out a study for the 910-mile pipeline, which would tap into natural gas wells at Turkmenistan's huge Dauletabad-Donmez field. The field holds more than 100 trillion cubic feet in gas reserves.

The pipeline would carry up to 700 billion cubic feet of gas a year.

The $1 million study approved last week by ADB directors is slated to begin next month and be complete in June 2003, after which work on setting up a consortium will begin.

The pipeline was originally launched in 1997 by a consortium led by U.S. energy giant Unocal Corp. but abandoned after the United States fired cruise missiles into Afghanistan in 1998 in pursuit of Osama bin Laden's al-Qaida network.

The Afghan, Pakistani and Turkmen leaders relaunched the project at a meeting in May in Islamabad. The signing ceremony was originally scheduled for October but was postponed because Pakistani officials were busy forming a Cabinet and because of questions the Asian Development Bank raised about financial aspects of the plan.

The Japanese conglomerate Itochu has expressed interest in participating, but no company has joined the project. Unocal said it has no plans to do so.

India is the main potential buyer of the Turkmen gas that would be pumped through Afghanistan. But efforts to interest New Delhi in the project so far have been unsuccessful, with India reluctant to depend on its rival Pakistan.

U.S. Deputy Secretary of State Elizabeth Jones said earlier this year that Washington would support the project as long as it is commercially viable.

Skeptics say the project would require an indefinite foreign military presence in Afghanistan.

The summit comes a month after the Turkmen government reported an assassination attempt against Niyazov. The authoritarian leader has ruled the five-million Central Asian nation with an iron hand since before the Soviet collapse, maintaining state control over the country's extensive energy resources.

[Edited on 27-12-2002 by Ocelot]

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