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Turkmenistan: Iranian Pipeline Option Sets A Model For Caspian Region

London, 8 May 1998 (RFE/RL) -- Energy analysts say an export pipeline linking gas fields in Turkmenistan to Iran has set a model for other energy projects in the Central Asia and Caucasus region, an area with immense oil and gas reserves.

It will be Turkmenistan's first export pipeline, enabling the landlocked Central Asian country -- with the fourth largest reserves of natural gas in the world -- to reach an outside market.

The project is being monitored by other energy-rich countries in the region, including Azerbaijan and Kazakhstan, but also by the U.S. which opposes Iranian transit corridors for Caspian oil and gas.

But the Clinton Administration has said it will not object to the pipeline running between Iran and Turkmenistan, which, along with other Central Asian countries, is among the poorest of the former Soviet republics, and badly needs petrodollar earnings.

In common with the other Central Asian and Caucasus nations, Turkmenistan is landlocked and needs a major gas pipeline if it is to exploit its potential to export up to 50,000 million cubic meters of gas a year.

The Korpedzhe (Turkmenistan)-Kurt Kum (Iran) pipeline was ceremonially inaugurated in December during a visit to Turkmenistan's capital, Ashgabat, by Iranian President Mohammad Khatami.

So far only 140 kms of the Iranian-funded pipeline have been laid. Although modest, this could be the start of Iran's ambitious drive to eventually build a 3,200 km natural gas pipeline from Turkmenistan to Turkey -- potentially its largest international energy project since the 1979 Islamic Revolution.

The first gas from western Turkmenistan is intended mainly for petrochemical plants in northern Iran. Turkmenistan plans to ship 4,000 million cubic meters of gas to Iran this year. Turkmenistan will repay Iran's investment in the pipeline with shipments of natural gas.

A report by the Market Intelligence Group, which investigates business opportunities in the CIS, says "the Iranian pipeline project has set a model for other energy projects in the area."

The giant Anglo-Dutch oil company, Shell, is now busy assessing the technical feasibility of an export pipeline to connect major gas fields in eastern Turkmenistan with Turkey via Iran. Another British project is looking at the potential of western Turkmenistan.

Although tension between Washington and Teheran has somewhat relaxed, the report says the U.S. is still seeking to limit Iran's influence and wants to see Turkmenistan's oil and gas exports take pipeline routes other than through Iran and Russia.

Iran, objecting to U.S. Congressional sanctions which it calls illegal under international law, insists that it is the logical route for the transfer of Caspian oil and gas to European and Asian markets.

The U.S. says Teheran has not renounced its support for international terrorism, and is seeking weapons of mass destruction.

In theory, there are four route options for gas and oil pipelines from Turkmenistan -- south, east, west or north. The southern route would run from Turkmenistan-Afghanistan-Pakistan to ports on the Indian Ocean. But the war in Afghanistan makes this impossible. The eastern route would mean shipments of Turkmen gas to China via Kazakhstan. But it would be hugely expensive to build a pipeline over such a vast distance: It is a project for the long-term only. The western route implies gas shipments from Turkmenistan to Turkey via Iran. But this would be difficult to implement because of the U.S. opposition to Iranian transit routes. An alternative western route for the pipelines would run from Turkmenistan across the Caspian sea floor to Azerbaijan and Turkey. As long as the Armenia-Azeri conflict remains unresolved, this is hardly an option.

That leaves the northern route: via Russia, and a connection to its pipelines. The report says Russian-Turkmenistan relations are at a "dead end." But after a summit of the presidents of Turkmenistan, Iran and Turkey in December it was clear that all three countries are interested in seeing the Russian energy giant, Gazprom, getting involved in the possible extension of the Turkmenistan-Iran gas pipeline through Iran to Turkey and onward to western Europe.

The report says Turkmenistan's gas industry is in a poor shape because of lack of repairs and maintenance, causing predictions of supply disruptions because of pipeline failures. Gazprom's involvement would allow Turkmen gas to be replaced with Russian gas in case of emergencies. Turkmenistan cannot wait until a new gas pipeline is built. So, in seeking export routes for its gas, Turkmenistan will likely seek a "tactical compromise" with Russia.