US oil and gas group planning $10 billion Pakistan project
29 August 2007
A consortium under the title US International Oil Company (IOC) is reported to have been awarded a contract by the Pakistan government to build an oil and gas project said to be worth $10 billion.
The award has been confirmed by IOC after an announcement from government sources saying that the project will include pipeline transport for oil and gas from Turkmenistan, over a distance of some 2200 km.
Between Turkmenistan and Pakistan stands Afghanistan which is bound to benefit from transit charges across such difficult terrain.
Questions of security and insurance in Afghanistan during the laying of the pipelines and after completion are reported to have been finalised with the oil company.
Turkmenistan, member state of the former Soviet Union, is among the countries in which the European Bank for Reconstruction and Development (EBRD) has been attempting to promote development through project financing.
But whether the Bank will play any part in funding the oil pipeline seems doubtful as it is seriously concerned by Turkmenistan’s continued failure to take any measures which would indicate a willingness to make progress towards multi-party democracy.
Financial support from one of the multilateral development banks will however be essential in building the confidence of the commercial banks in advancing huge sums in territories which are fraught with risk.
The World Bank currently has no active projects in Turkmenistan but speaks of the economy as one of robust growth. The country recently signed a 30-year agreement with China for natural gas exports.
The US Agency for International Development (USAID) has been showing interest for some time in development of Turkmenistan’s gas resources which are believed to be the fourth largest in the world. Oil reserves are also significant, creating potential for this Eurasian community to play an important part in world energy markets.
But like EBRD, USAID is concerned that Turkmenistan is becoming a closed-state dictatorship which limits US involvement and business opportunities.
Despite the difficult terrain and long distance, the US promoters claim that the 2,200 km pipeline can be built in three years. Similar claims were made when BP launched construction of its Caucasian oil pipeline from Baku to the Ceyhan marine terminal via Tbilisi.
That took at least a year longer to complete though its length was about 500 km less and the territory much easier of access.
The $10 billion TAP project is said to include two oil refineries to be built in Pakistan and four thermal power stations. It will if successful undoubtedly transform the country’s economy.
CIOB International News - US oil and gas group planning $10 billion Pakistan project
