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Turkey: Gas Agreement Reveals Iranian Role As Broker For Central Asian Energy

Prague, 15 August 1996 (RFE/RL) -- Turkey's decision this week to buy natural gas from Iran highlights Tehran's growing role as a broker for Central Asian energy despite Washington's efforts to isolate Iran as a rogue state.

The new Islamic-led government in Ankara clashed with Washington by signing a $23 billion agreement to buy natural gas from Iran over the next two decades, including some gas which will originate in Turkmenistan. The announcement came just days after the United States announced sanctions on foreign companies investing in oil and gas projects in Iran and Libya, which the United States accuses of international terrorism.

The deal left Washington and Ankara squabbling, and marked Tehran's success at becoming a middleman in Central Asia's emerging energy bonanza. Oil experts believe the Caspian region holds the world's second largest oil reserves after the Persian Gulf, and Tehran hopes for an influential role in the new business.

The Tehran-Ankara deal follows other recent signs that Tehran is making inroads in Central Asia. This week, Iran's state news agency IRNA announced that Tehran and Kazakhstan have agreed to swap crude oil. It said Kazakhstan will initially ship two million tons of oil to Iran's fuel-hungry northern provinces, which are far from Iran's own oil fields. In exchange, Iran agreed to export the same amount of oil from its Persian gulf terminals on behalf of Kazakhstan.

Earlier this year, Tehran opened a new rail line linking the Iranian and Central Asian rail systems. Tehran has also urged reviving ancient "silk road" trade routes which once connected Central Asia through Persia with Europe and China.

Iran's moves put it in direct competition with other major powers seeking a role in Central Asia's expected energy boom, including the United States, Moscow, and Turkey. The region's wells and the pipelines which will carry its oil and natural gas to world markets have yet to be developed to anything close to the region's potential, making Central Asia one of the great economic playing fields of the next century.

Elaine Holoboff, an expert on energy issues at King's College, London, says the "great game" in Central Asia is already well under way, even though no new wells have been dug and energy production for the region has fallen below that during the Soviet era. Foreign governments and companies which now establish energy exploration rights and pipeline routes in Central Asia will gain influence there for decades, she said.

Moscow, Washington, and Ankara know this, as does Tehran. So far, much of the early competition between the players has focused on determining the pipeline routes which will carry the oil and gas out of landlocked Central Asia and down to the sea for shipping.

Moscow has used its political weight in the region to demand that a share of the oil be exported to the Black Sea through Russia and pay Russian pipeline transit fees. Turkey, backed by the United States, has argued for a pipeline through Georgia and, eventually, through Turkey.

Last October, an international consortium broke a deadlock over the westward pipelines by agreeing on two routes, one through Russia and one through Georgia.

But the westward pipelines, which the consortium hopes to have in operation before the turn of the century, still face construction problems.

The Russian route leads through the breakaway Russian republic of Chechnya, which Moscow is still as far from pacifying as it was when war broke out 20 months ago. The route through Georgia seems more stable, but Georgia, too, has been the scene of separatist conflict in recent years.

Meanwhile, Tehran has made little progress in urging pipelines from Central Asia southward to its ports, largely because of the U.S. sanctions on Iran.

Yesterday, a consortium of Russian, Turkmen, U.S. and Saudi Arabian oil groups signed a memorandum of understanding on building a 1,400 kilometer-long natural gas pipeline from Turkmenistan to Pakistan. The $2 billion pipeline from Turkmenistan, which borders Iran, must span war-torn Afghanistan to reach Pakistan and seems a long way to go to reach the sea. But the U.S. sanctions forbid American oil companies participating in the project from investing in Iran.