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Monday, December 29, 1997 Published at 14:13 GMT

World: Analysis

Race to unlock Central Asia's energy riches
image: [ The completed pipeline could be the first of many as the oil and gas comes on stream ]
The completed pipeline could be the first of many as the oil and gas comes on stream

The Presidents of Iran and the Central Asian republic of Turkmenistan have opened a gas pipeline between their two countries -- the first out of the Caspian region not to go through Russian territory. The pipeline links the Korpedzhe gas field in south-western Turkmenistan to the village of Kord-Kuy in northern Iran. But there are proposals eventually to extend the pipeline to Turkey and European markets. These have been opposed by the United States, which is anxious to exclude Iran from the scramble to develop the rich resources of neighbouring countries in the Caspian region -- as our regional reporter, Caroline Hawley, reports.

This initial project is relatively small. It is the result of a 1995 agreement to supply power stations in northern Iran with Turkmen gas for the next twenty-five years. Gas from Iran's own fields in the area will then be pumped down for consumption in the capital, Tehran. But the significance of the project is much wider.

This is the first export of Turkmen gas outside the former Soviet Union, and a step towards President Saparmurad Niyazov's dream of turning his desert republic into what he hopes will be a new "Kuwait."

Crucial deal for Iran

[ image:  ]
The potential importance of the project for Iran was underlined by the presence -- at the inauguration ceremony -- of the Iranian President, Muhammad Khatami, on his first trip abroad since he took power in August.

On Sunday, energy ministers from Iran, Turkmenistan and Turkey signed an agreement authorizing the Shell oil company to draw up plans to extend the pipeline. Shell has not yet commented publicly -- a spokesman said he was still checking the reports.

But if the pipeline is eventually extended to Turkey and Europe via Iran it'll be a major victory for Tehran in its attempts to break out of its political isolation.

American objections

The new oil and gas finds in the Caspian have generated a host of pipeline proposals. Iran offers one of the most direct routes out of a landlocked region. It's an important alternative to Russia for the newly-independent states, keen to maintain their independence from their former masters in Moscow. But there is a serious drawback. The Iranian route is strongly opposed by the United States, making it difficult to secure international funding.

Alternative route could go through Afghanistan

American oil companies, together with Pakistan, have shown strong interest in an alternative route that would carry Turkmen gas, via Afghanistan, to the Pakistani port of Karachi. Despite the continuing civil war in Afghanistan, there's been fierce competition between two rival firms -- Bridas of Argentina, and the US-Saudi consortium UNOCAL -- to construct the pipeline. Both companies have been negotiating hard with the Taleban movement, which controls two thirds of Afghanistan, to secure the contract.

In May, the Turkmen President, Saparmurad Niyazov and the Pakistani prime minister, Nawaz Sharif, signed a protocol for the pipeline. But no agreement has yet been finalised, and construction of any pipeline will clearly have to wait until there is an end to the fighting in Afghanistan.

The fact that the Afghan route is being considered so seriously is a measure of the strength of American opposition to the Iranian route. As part of its effort to isolate Iran, the United States imposes sanctions against companies that invest who invest more than twenty million dollars in Iran's energy sector. Earlier this year, American officials said they weren't sure if a gas pipeline via Iran to Turkey would violate its laws against investment in Iran's energy sector. That was interpreted in many quarters as a green light for the project because it was meant to carry Turkmen, not Iranian gas. But American officials have since made clear they're still opposed to Iran's involvment in the race to develop and export Caspian energy.

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