Thread: IT'S ALL ABOUT OIL!

IT'S ALL ABOUT OIL!


WHATREALLYHAPPENED.COM


In 1998, Dick Cheney, now US vice-president but then chief executive of a major oil services company, remarked: "I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian." But the oil and gas there is worthless until it is moved. The only route which makes both political and economic sense is through Afghanistan. [Guardian]


1998 Unocal Statement:
Suspension of activities related to proposed
natural gas pipeline across Afghanistan

As a result of sharply deteriorating political conditions in the region, Unocal, which serves as the development manager for the Central Asia Gas (CentGas) pipeline consortium, has suspended all activities involving the proposed pipeline project in Afghanistan.

From the 1998 Congressional Record.
Emphasis added to text.

U.S. INTERESTS IN THE CENTRAL ASIAN
REPUBLICS HEARING BEFORE THE
SUBCOMMITTEE ON ASIA AND THE PACIFIC
OF THE COMMITTEE ON INTERNATIONAL
RELATIONS HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS SECOND SESSION
FEBRUARY 12, 1998

Next we would like to hear from Mr. John J. Maresca, vice president of international relations, Unocal Corporation. You may proceed as you wish.

STATEMENT OF JOHN J. MARESCA, VICE
PRESIDENT OF INTERNATIONAL RELATIONS, UNOCAL CORPORATION

Mr. Maresca. Thank you, Mr. Chairman. It's nice to see you again. I am John Maresca, vice president for international relations of the Unocal Corporation. Unocal, as you know, is one of the world's leading energy resource and project development companies. I appreciate your invitation to speak here today. I believe these hearings are important and timely. I congratulate you for focusing on Central Asia oil and gas reserves and the role they play in shaping U.S. policy.

I would like to focus today on three issues. First, the need for multiple pipeline routes for Central Asian oil and gas resources. Second, the need for U.S. support for international and regional efforts to achieve balanced and lasting political settlements to the conflicts in the region, including Afghanistan. Third, the need for structured assistance to encourage economic reforms and the development of appropriate investment climates in the region. In this regard, we specifically support repeal or removal of section 907 of the Freedom Support Act.

Mr. Chairman, the Caspian region contains tremendous untapped hydrocarbon reserves. Just to give an idea of the scale, proven natural gas reserves equal more than 236 trillion cubic feet. The region's total oil reserves may well reach more than 60 billion barrels of oil. Some estimates are as high as 200 billion barrels. In 1995, the region was producing only 870,000 barrels per day. By 2010, western companies could increase production to about 4.5 million barrels a day, an increase of more than 500 percent in only 15 years. If this occurs, the region would represent about 5 percent of the world's total oil production.

One major problem has yet to be resolved: how to get the region's vast energy resources to the markets where they are needed. Central Asia is isolated. Their natural resources are land locked, both geographically and politically. Each of the countries in the Caucasus and Central Asia faces difficult political challenges. Some have unsettled wars or latent conflicts. Others have evolving systems where the laws and even the courts are dynamic and changing. In addition, a chief technical obstacle which we in the industry face in transporting oil is the region's existing pipeline infrastructure.

Because the region's pipelines were constructed during the Moscow-centered Soviet period, they tend to head north and west toward Russia. There are no connections to the south and east. But Russia is currently unlikely to absorb large new quantities of foreign oil. It's unlikely to be a significant market for new energy in the next decade. It lacks the capacity to deliver it to other markets.

Two major infrastructure projects are seeking to meet the need for additional export capacity. One, under the aegis of the Caspian Pipeline Consortium, plans to build a pipeline west from the northern Caspian to the Russian Black Sea port of Novorossiysk. Oil would then go by tanker through the Bosporus to the Mediterranean and world markets.

The other project is sponsored by the Azerbaijan International Operating Company, a consortium of 11 foreign oil companies, including four American companies, Unocal, Amoco, Exxon and Pennzoil. This consortium conceives of two possible routes, one line would angle north and cross the north Caucasus to Novorossiysk. The other route would cross Georgia to a shipping terminal on the Black Sea. This second route could be extended west and south across Turkey to the Mediterranean port of Ceyhan.

But even if both pipelines were built, they would not have enough total capacity to transport all the oil expected to flow from the region in the future. Nor would they have the capability to move it to the right markets. Other export pipelines must be built.

At Unocal, we believe that the central factor in planning these pipelines should be the location of the future energy markets that are most likely to need these new supplies. Western Europe, Central and Eastern Europe, and the Newly Independent States of the former Soviet Union are all slow growth markets where demand will grow at only a half a percent to perhaps 1.2 percent per year during the period 1995 to 2010.

Asia is a different story all together. It will have a rapidly increasing energy consumption need. Prior to the recent turbulence in the Asian Pacific economies, we at Unocal anticipated that this region's demand for oil would almost double by 2010. Although the short-term increase in demand will probably not meet these expectations, we stand behind our long-term estimates.

I should note that it is in everyone's interest that there be adequate supplies for Asia's increasing energy requirements. If Asia's energy needs are not satisfied, they will simply put pressure on all world markets, driving prices upwards everywhere.

The key question then is how the energy resources of Central Asia can be made available to nearby Asian markets. There are two possible solutions, with several variations. One option is to go east across China, but this would mean constructing a pipeline of more than 3,000 kilometers just to reach Central China. In addition, there would have to be a 2,000-kilometer connection to reach the main population centers along the coast. The question then is what will be the cost of transporting oil through this pipeline, and what would be the netback which the producers would receive.

For those who are not familiar with the terminology, the netback is the price which the producer receives for his oil or gas at the well head after all the transportation costs have been deducted. So it's the price he receives for the oil he produces at the well head.

The second option is to build a pipeline south from Central Asia to the Indian Ocean. One obvious route south would cross Iran, but this is foreclosed for American companies because of U.S. sanctions legislation. The only other possible route is across Afghanistan, which has of course its own unique challenges. The country has been involved in bitter warfare for almost two decades, and is still divided by civil war. From the outset, we have made it clear that construction of the pipeline we have proposed across Afghanistan could not begin until a recognized government is in place that has the confidence of governments, lenders, and our company.

Mr. Chairman, as you know, we have worked very closely with the University of Nebraska at Omaha in developing a training program for Afghanistan which will be open to both men and women, and which will operate in both parts of the country, the north and south.

Unocal foresees a pipeline which would become part of a regional system that will gather oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia. The 1,040-mile long oil pipeline would extend south through Afghanistan to an export terminal that would be constructed on the Pakistan coast. This 42-inch diameter pipeline will have a shipping capacity of one million barrels of oil per day. The estimated cost of the project, which is similar in scope to the trans-Alaska pipeline, is about $2.5 billion.

Given the plentiful natural gas supplies of Central Asia, our aim is to link gas resources with the nearest viable markets. This is basic for the commercial viability of any gas project. But these projects also face geopolitical challenges. Unocal and the Turkish company Koc Holding are interested in bringing competitive gas supplies to Turkey. The proposed Eurasia natural gas pipeline would transport gas from Turkmenistan directly across the Caspian Sea through Azerbaijan and Georgia to Turkey. Of course the demarcation of the Caspian remains an issue.

Last October, the Central Asia Gas Pipeline Consortium, called CentGas, in which Unocal holds an interest, was formed to develop a gas pipeline which will link Turkmenistan's vast Dauletabad gas field with markets in Pakistan and possibly India. The proposed 790-mile pipeline will open up new markets for this gas, traveling from Turkmenistan through Afghanistan to Multan in Pakistan. The proposed extension would move gas on to New Delhi, where it would connect with an existing pipeline. As with the proposed Central Asia oil pipeline, CentGas can not begin construction until an internationally recognized Afghanistan Government is in place.

The Central Asia and Caspian region is blessed with abundant oil and gas that can enhance the lives of the region's residents, and provide energy for growth in both Europe and Asia. The impact of these resources on U.S. commercial interests and U.S. foreign policy is also significant. Without peaceful settlement of the conflicts in the region, cross-border oil and gas pipelines are not likely to be built. We urge the Administration and the Congress to give strong support to the U.N.-led peace process in Afghanistan. The U.S. Government should use its influence to help find solutions to all of the region's conflicts.

U.S. assistance in developing these new economies will be crucial to business success. We thus also encourage strong technical assistance programs throughout the region. Specifically, we urge repeal or removal of section 907 of the Freedom Support Act. This section unfairly restricts U.S. Government assistance to the government of Azerbaijan and limits U.S. influence in the region.

Developing cost-effective export routes for Central Asian resources is a formidable task, but not an impossible one. Unocal and other American companies like it are fully prepared to undertake the job and to make Central Asia once again into the crossroads it has been in the past. Thank you, Mr. Chairman.

http://whatreallyhappened.com/WRHARTICLES/oil.html

US policy on Taliban influenced by oil


By Julio Godoy
Asia Times
November 20, 2001


PARIS - Under the influence of United States oil companies, the government of President George W Bush initially blocked intelligence agencies' investigations on terrorism while it bargained with the Taliban on the delivery of Osama bin Laden in exchange for political recognition and economic aid, two French intelligence analysts claim.

In the book Bin Laden, la verite interdite (Bin Laden, the forbidden truth), that was released recently, the authors, Jean-Charles Brisard and Guillaume Dasquie, reveal that the Federal Bureau of Investigation's (FBI) deputy director John O'Neill resigned in July in protest over the obstruction.

The authors claim that O'Neill told them that "the main obstacles to investigate Islamic terrorism were US oil corporate interests and the role played by Saudi Arabia in it". The two claim that the US government's main objective in Afghanistan was to consolidate the position of the Taliban regime to obtain access to the oil and gas reserves in Central Asia.

They affirm that until August, the US government saw the Taliban regime "as a source of stability in Central Asia that would enable the construction of an oil pipeline across Central Asia" from the rich oilfields in Turkmenistan, Uzbekistan, and Kazakhstan, through Afghanistan and Pakistan, to the Indian Ocean. Until now, says the book, "the oil and gas reserves of Central Asia have been controlled by Russia. The Bush government wanted to change all that."

But, confronted with Taliban's refusal to accept US conditions, "this rationale of energy security changed into a military one", the authors claim.

"At one moment during the negotiations, the US representatives told the Taliban, 'either you accept our offer of a carpet of gold, or we bury you under a carpet of bombs,'" Brisard said in an interview in Paris.

According to the book, the Bush administratino began to negotiate with the Taliban immediately after coming into power in February. US and Taliban diplomatic representatives met several times in Washington, Berlin and Islamabad.

To polish their image in the United States, the Taliban even employed a US expert on public relations, Laila Helms. The authors claim that Helms is also an expert in the works of US intelligence organizations, for her uncle, Richard Helms, is a former director of the Central Intelligence Agency (CIA).

The last meeting between US and Taliban representatives took place in August, five weeks before the attacks on New York and Washington, the analysts maintain. On that occasion, Christina Rocca, in charge of Central Asian affairs for the US government, met the Taliban ambassador to Pakistan in Islamabad.

Brisard and Dasquie have long experience in intelligence analysis. Brisard was until the late 1990s director of economic analysis and strategy for Vivendi, a French company. He also worked for French secret services, and wrote for them in 1997 a report on the now famous Al-Qaeda network, headed by bin Laden.

Dasquie is an investigative journalist and publisher of Intelligence Online, a respected newsletter on diplomacy, economic analysis and strategy, available through the Internet.

Brisard and Dasquie draw a portrait of the closest aides to Bush, linking them to the oil business. Bush's family has a strong oil background, as do some of his top aides. From Vice President Dick Cheney, through the director of the National Security Council Condoleezza Rice, to the ministers of commerce and energy, Donald Evans and Stanley Abraham, all have for long worked for US oil companies.

Cheney was until the end of last year president of Halliburton, a company that provides services for oil industry; Rice was between 1991 and 2000 manager for Chevron; Evans and Abraham worked for Tom Brown, another oil giant.

Besides the secret negotiations held between Washington and Kabul and the importance of the oil industry, the book takes issue with the role played by Saudi Arabia in fostering Islamic fundamentalism, in the personality of bin Laden, and with the networks that the Saudi dissident built to finance his activities.

Brisard and Dasquie contend that the US government's claim that it had been prosecuting bin Laden since 1998. "Actually," Dasquie says, "the first state to officially prosecute bin Laden was Libya, on the charges of terrorism."

"Bin Laden wanted to settle in Libya in the early 1990s, but was hindered by the government of Muammar Gaddafi," Dasquie claims. "Enraged by Libya's refusal, bin Laden organized attacks inside Libya, including assassination attempts against Gaddafi."

Dasquie singles out one group, the Islamic Fighting Group (IFG), reputedly the most powerful Libyan dissident organization, based in London, and directly linked with bin Laden. "Gaddafi even demanded Western police institutions, such as Interpol, to pursue the IFG and bin Laden, but never obtained cooperation," Dasquie says. "Until today, members of IFG openly live in London."

The book confirms earlier reports that the US government worked closely with the United Nations during the negotiations with the Taliban. "Several meetings took place this year, under the arbitration of Francesc Vendrell, personal representative of UN Secretary-General Kofi Annan, to discuss the situation in Afghanistan," says the book. "Representatives of the US government and Russia, and the six countries that border with Afghanistan were present at these meetings," it says. "Sometimes, representatives of the Taliban also sat around the table."

These meetings, also called Six plus 2, because of the number of states (six neighbors plus the US and Russia) involved, have been confirmed by Naif Naik, former Pakistani minister for foreign affairs.

In a French television news program two weeks ago, Naik said that during a Six plus 2 meeting in Berlin in July, the discussions turned around "the formation of a government of national unity. If the Taliban had accepted this coalition, they would have immediately received international economic aid. And the pipelines from Kazakhstan and Uzbekistan would have come," he added.

Naik also claimed that Tom Simons, the US representative at these meetings, openly threatened the Taliban and Pakistan. "Simons said, 'either the Taliban behave as they ought to, or Pakistan convinces them to do so, or we will use another option'. The words Simons used were 'a military operation'," Naik claimed.

http://www.atimes.com/c-asia/CK20Ag01.html

Central Asia pipeline deal signed


By Ian McWilliam
BBC
27 December, 2002



An agreement has been signed in the Turkmen capital, Ashgabat, paving the way for construction of a gas pipeline from the Central Asian republic through Afghanistan to Pakistan.

The building of the trans-Afghanistan pipeline has been under discussion for some years but plans have been held up by Afghanistan's unstable political situation.
This follows a summit meeting bringing together the presidents of the three countries last May when the project received formal go-ahead.

The pipeline would represent the first major foreign investment in Afghanistan in many years.

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The project has been around for some years

Alternate route

With improved regional security after the fall of the Taleban about a year ago, Afghanistan, Turkmenistan and Pakistan have decided to push ahead with plans for the ambitious 1,500-kilometre-long gas pipeline.

The leaders of the three countries have now signed a framework agreement defining the legal aspects of setting up a consortium to build and operate the pipeline.
The trans-Afghanistan pipeline would export Turkmen gas via Afghanistan to Pakistani ports, from where it could reach world markets.

[/img]http://news.bbc.co.uk/media/images/38631000/jpg/_38631631_regcnap150.jpg[img]

India is the largest potential buyer and the Afghan President, Hamid Karzai, said Delhi was welcome to join the project.

Turkmenistan has some of the world's greatest reserves of natural gas, but still relies on tightly controlled Russian pipelines to export it.

Ashgabat has long been desperate to find an alternative export route.

Wary investors

Afghanistan would profit by receiving millions of dollars in transit fees and construction of the pipeline would provide thousands of desperately needed jobs.

It is also hoped such a project would boost regional economic ties and pave the way for further foreign investment.

The chief difficulty will be actually finding the money to build the pipeline.

The Asian Development Bank is carrying out a study for the project.

But investors will be very cautious about putting serious money into Afghanistan when the central government in Kabul still has only limited influence in the regions the pipeline would cross.

http://news.bbc.co.uk/2/hi/south_asia/2608713.stm[/img]