The Great Gas Game, Part I

The global shale gas boom has barely begun. It is already old news in North America, but emerging markets in Asia have found that demand consistently outstrips supply, due not only to scarcity, but also to underdevelopment of existing resources. One of the largest sources of undeveloped energy and mineral wealth lies in the Caspian Sea and LNG/oil fields of Turkmenistan and Kazakhstan. Both countries have been busy extracting the precious resources, but the central problem of development is midstream transportation to the hugely underserved Indian and Chinese markets. All potential routes lead through the volatile regions of central and south Asia.

There are several proposed pipeline development projects throughout the region: the most notable are the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline, the IP (Iran-Pakistan) pipeline, the submarine Trans-Caspian Pipeline which may someday supply Europe while circumventing Iran and Russia, and finally, China’s already completed Central Asian Gas Pipeline (CAGP) which connects to the rest of the country’s midstream network through Xinjiang province. An extant Soviet-era network of pipelines, called the Central Asia – Center (CAC) pipeline network also takes gas from Turkmenistan and Kazakhstan to Russia. Each of the projects reflects the interests of outside powers imposing their influence on Central Asia to the detriment of the others. Were Rudyard Kipling or Arthur Conolly alive today, they might say that the Great Game is still alive and well.

The TAPI Pipeline Consortium hopes to run its pipeline from production centers in the Dauletebad gas fields of Turkmenistan down through Afghanistan to Herat and through Kandahar to Quetta in Pakistan – a corridor that has earned distinction as one of the most dangerous areas of the world, particularly in light of the war and occupation throughout Afghanistan, and the civil unrest that plagues the Federally Administered Tribal Areas of Pakistan (FATA). The pipeline’s inception incredibly took place during one of the most brutal periods of Central Asian history – the 1990’s, when the Argentinian E&P firm Bridas and American Unocal negotiated with the Taliban, but their efforts to build a consensus were derailed in 1998 when Taliban leader Mullah Mohammed Omar declared his public support for bin Laden and al Qaeda’s bombings of the US embassies in Nairobe and Dar es Salaam.

However, the idea itself survived. Revived by funding from the ADB, and with the blessing of the United States (whose interest in this pipeline is to defer plans to build an Iran-Pakistan pipeline), the pipeline has been approved by ministers from all four countries. However, much remains to be decided – each country will have its own contract that will be auctioned separately. Other concerns abound – including the imminent departure of the United States from Afghanistan and concerns about security of the construction. Recent attacks on extant oil and LNG pipelines in Pakistan have caused India some concern over the security of the project, and a Pakistani minister clarified the issue: “…each country will be responsible to ensure the security of the pipeline through which it would pass. This is a settled issue.”

The four countries of the pipeline have selected the Asian Development Bank to raise the necessary funds for TAPI, which have ballooned since the idea’s inception to over $9 billion. All the TAPI-affiliated countries are leaning towards US energy developers, like Texas-based ConocoPhillips and other US corporations like Chevron have expressed interest. The project’s estimated completion date is sometime in 2017-2018, but many think this is an overzealous projection.  Meanwhile, competition has increased for remaining reserves in Turkmenistan, the major players being Russia, the US, India, China, and to a lesser extent, Iran.


  • Iranian foreign minister Javad Zarif and EU Foreign Policy Minister Catherine Ashton will meet today in Vienna, commencing the so-called P5+1 talks on Iranian nuclear facilities and economic sanctions. Diplomats from China, Russia, France, Germany, and the US will be present to discuss the extension of the lifeline thrown to the regime late last year in the form of easing restrictions on imports. The Vienna Negotiations will have three foci: the first and most obvious being the allowable level of uranium enrichment, the second is the future of the specific reactor at Arak, and the third a more nebulous “possible military dimensions.” It is expected that in the absence of total acquiescence to Western demands of dismantling the nuclear program that the push of the negotiations will be towards reconfiguration of the Arak reactor to a light-water design, which will produce far less material capable of being refined into plutonium. Stay tuned for developments over the next few days.
  • On Friday, a group of purported religious extremists attacked police in China’s Xinjiang province, home to the Muslim Uighurs separatists against Chinese rule, resulting in 12 casualties. The attackers were armed with explosives and machetes, according to police statements. This comes soon after a January 24 attack on a police station in Xinhe caused the death of several other police officers and reveals a worrying trend that violence has increased by a significant margin in Xinjiang since 2011. In 2012 there were some 190 recorded terrorist attacks.
  • Kazakhstan has issued a statement on its relationship to Russia within the nascent Customs Union (CU), a Russian-engineered economic zone that hopes to promote trade and development – a Eurasian answer to the European Union, if you will. Integration with Russia’s economy has so far not gone very well, but Russia’s announcement of giving more political functions to the CU caused some pushback from Kazakh president Nursultan Nazarbayev, who declared that the Eurasian Economic Union was in no way an attempt to revive the collapsed USSR.

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