Pipe Dreams
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    Turkmen well
Workers inspect the shut-down gas well in eastern Turkmenistan.
(By Dan Morgan – The Washington Post)
Page Two
The Route to Pakistan
Continued from preceding page

To State Department strategists, the perfect pipeline out of Dauletabad lay in a different direction: from Turkmenistan across Afghanistan to Pakistan, connecting the gas resources of Central Asia to the surging economies of South Asia. Such a line would deprive Iran of transit fees for Turkmen gas crossing its territory while capturing the South Asian gas market coveted by Iran.

The initial enthusiast for the Afghan route was not an American, however, but Carlos Bulgheroni, the short, workaholic chairman of the Bridas Group, an Argentine company. In 1993, a Bridas joint venture with Turkmenistan had begun laying more than 2,000 miles of seismic lines to map the geology of a potential gas field in eastern Turkmenistan. Two test wells confirmed a huge gas deposit 150 miles from the Afghan border.

In the spring of 1995, Turkmenistan and Pakistan commissioned Bulgheroni's company to study the Afghan route. But that summer, a rival entered the game. John Imle, president of California-based Unocal Corp., wooed Niyazov and Benazir Bhutto, then prime minister of Pakistan, throughout July with a vision of a Unocal pipeline following roughly the same route as the one proposed by Bridas.

A Unocal link had strong appeal for Niyazov. Afghanistan was in turmoil. A big American oil company could draw on the political muscle of the United States to promote Turkmenistan's energy interests.

In October 1995, both Bulgheroni and Imle followed Niyazov to New York for the opening of the U.N. General Assembly. Each expected to be chosen to build the Afghan pipeline, according to sources close to the two men. On Oct. 21, the nod went to the Americans as Niyazov announced the selection of Unocal. Looking on at the announcement ceremony was former secretary of state Henry A. Kissinger, now a Unocal consultant. Given the uncertain political situation in Afghanistan, Kissinger said, the deal looked like "the triumph of hope over experience."

Arrests Cloud Relationship

The Clinton administration's relationship with Niyazov had begun sourly when the Turkmen leader jailed a group of opposition leaders just before the arrival in September 1993 of Assistant Secretary of State Strobe Talbott. A miffed Talbott canceled most of his meetings and left without even spending the night.

But by 1996, Niyazov looked less offensive. His embrace of Unocal and his interest in a South Asian pipeline had piqued U.S. interest. That is clear from memos written in 1996 by Tsalik Nayberg, a Unocal representative in Ashgabat, the Turkmen capital. Some of Nayberg's reports to his superiors are part of the record in a civil lawsuit that Bridas filed against Unocal in Texas two years ago, charging Unocal with interfering with its business in Turkmenistan.

Nayberg reported to Unocal on Sept. 17, 1996, that U.S. Ambassador "Michael Cotter feels President Niyazov is unhappy with us and is not entirely educated on major steps required to implement a project of such magnitude."

Unocal was, in fact, in a difficult spot. Bridas had signed an exclusive contract in Afghanistan for pipeline transit rights, thwarting the American company. The defeat of the Kabul government by Taliban fundamentalist guerrillas in late 1996 brought Unocal new hope of cutting a deal in Afghanistan, but it proved short-lived.

The Taliban quickly alienated U.S. public opinion by forcing women out of schools and workplaces and imposing a stringent new code of dress and behavior. While maintaining contacts with the Taliban, the Clinton administration shelved any idea of recognizing the regime. Without that U.S. imprimatur, banks and international financial institutions would not lend money to build the pipeline from Turkmenistan to Pakistan.

The indefinite delay left Niyazov with few options at a time when he was under pressure to find new sources of gas revenue.

Turkmenistan's gas exports had peaked in 1991 before sliding sharply. Debt-ridden customers such as Ukraine and Georgia fell behind on payments, and deliveries were reduced. Niyazov began scouting potential new customers in Pakistan, Turkey and China.

In August 1997, the Russian gas monopoly Gazprom abruptly severed an arrangement that had allowed Turkmenistan to use Gaz prom's pipeline system to export 700 billion cubic feet of gas annually to Western Europe for payment in dollars.

Gazprom's diminutive but volatile chief, Rem Vyakhirev, announced that Turkmenistan could keep using his pipeline network to supply customers in the former Soviet Union but not to reach European customers. Russia would keep those markets for itself. Vyakhirev sarcastically promised to do what he could to keep the Turkmen population "from starving to death."

At an angry meeting with Vyakhirev in Moscow, Niyazov made his countermove. According to an account he later gave an American, the Turkmen leader declared, "We will cut off our gas."

With the route to Pakistan blocked and relations with the Russians on the rocks, Niyazov was running out of options. He still had one obvious outlet, however, one certain to catch the attention of both Washington and Moscow.

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© Copyright 1998 The Washington Post Company

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