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Kazakhstan: Talk Of Oil Pipeline Through Afghanistan Seen As Premature

Kazakhstan President Nursultan Nazarbaev's trip to India has prompted renewed reports of a deal for a pipeline through Afghanistan. But the hope may be the result of more wishful thinking than facts, and Kazakhstan's concern over its dependence on Russian routes.

Boston, 15 February 2002 (RFE/RL) -- Kazakhstan President Nursultan Nazarbaev sparked tentative interest in his country's oil resources during a visit to India this week. But Kazakh reports of a pipeline deal involving Afghanistan seem to have been greatly overblown.

Nazarbaev led a 43-person delegation on a five-day mission, holding meetings with Indian President K.R. Narayanan, Prime Minister Atal Bihari Vajpayee, and other officials in a series of cities.

"The Times" of India reported that the two countries signed a protocol to facilitate closer cooperation. The accord covered trade, economic, scientific, industrial, and cultural fields.

In a joint commission chaired by their respective energy ministers, Kazakhstan invited India's state-owned oil and gas company ONGC Videsh and the Gas Authority of India Limited to join in tenders for two petroleum fields, the Press Trust of India said.

The sides reportedly agreed that Indian petroleum companies have the experience to help modernize Kazakhstan refineries built during Soviet times. Kazakhstan also invited India to invest in a wide variety of its businesses, from agriculture to information technology and defense.

But the low-key news was reported far more enthusiastically by commercial television in Kazakhstan. One report transcribed by the BBC said, "Today, Kazakhstan officially agreed to lay an oil pipeline from our country to the shore of the Indian Ocean."

The broadcast said that India had already "received a concession to develop two major hydrocarbon deposits," and that Indian companies "will modernize and, if necessary, build new oil refineries in western Kazakhstan where the main oil fields lie." The report appears to be the result of wishful thinking.

Tenders have yet to take place for the two deposits, which have been identified as the Karazhanbas-Sea field off the Caspian shore and the Amangeldy gas field in southern Kazakhstan near Zhambyl. The Press Trust of India said the two concessions are "of medium size."

A second Kazakhstani television report on the proposed pipeline stated: "Other regional countries have already responded to the start of the implementation of this project." It cited a letter from Turkmen President Saparmurat Niyazov to the head of Afghanistan's interim government, Hamid Karzai, seeking "a share in a Kazakhstan- Turkmenistan-Afghanistan-Pakistan-India oil pipeline."

But if there has been any firm plan for such a project, it has yet to emerge. Despite the report that Kazakhstan has agreed to build the line, there have been no feasibility studies, foreign partners, or financing for the work.

The premature accounts appear to be the result of new optimism spreading among nearby nations following the defeat of Afghanistan's Taliban. But while possibilities for new transit routes may be emerging, they have yet to be supported by facts.

Since the Taliban's ouster, the U.S.-based Unocal Corporation has repeatedly denied that it is pursuing a pipeline project through Afghanistan that it dropped over three years ago. No other big companies have come forward to fill the gap. Yet, the regional interest in the idea continues to generate excitement, as if a race for the route had already begun.

There may be arguments for optimism, but there are many more reasons for doubt.

Such a plan assumes not only that peace in Afghanistan has already been fully achieved, but also that India and Pakistan will settle a half-century of differences for the sake of energy transit that would benefit distant Central Asian states.

When the Unocal plan was under consideration, it was for a 1,400-kilometer pipeline to carry gas from Turkmenistan with the possible addition of an oil line at a later date. The idea of a pipeline from a western Kazakhstan oil field like the Karazhanbas-Sea deposit to the Indian Ocean is literally far-fetched. It would require a pipeline some 4,000 kilometers long. China's plan for a line of similar length, which it promised in 1997, has shown no sign of progress in nearly five years.

There seem to be at least two motives for imagining that such a project would be possible now. The first is the suspicion that the war in Afghanistan was secretly driven by a U.S. desire to control pipeline routes rather than terrorism. That conspiracy theory seems to lack any factual basis and totally ignores the 11 September attacks on the United States.

A second reason is Kazakhstan's need to find oil routes that do not depend on Russia completely. Russia carried about 95 percent of Kazakhstan's oil exports last year, according to figures quoted by Kazakhoil President Nurlan Balgimbaev to the Interfax news agency this month.

"Petroleum Argus," an industry newsletter, reported last week that some Russian oil companies are trying to exclude Kazakhstan's oil from the transit pipelines to make more room for their own. Argus said that "if Russia begins to interfere with transit shipments, Kazakhstan will be impelled to look elsewhere in earnest." That may be exactly what Nazarbaev is doing now.

But so far, he has found few alternatives to Russian transit. Despite five years of negotiation, Kazakhstan has managed to move almost no oil through Iran. And he has continued to stall on a commitment to ship oil through the U.S.-backed Baku-Ceyhan pipeline, which is scheduled to start construction this year. Instead, he has searched as far as India in hopes of new routes.

Kazakhstan seems likely to find Asian markets for its resources sometime in the future, but its hopes for future pipelines may be of little use to it now.