0601031 business opportunities in afganistan.doc

Topic – Business Opportunities in Afganistan
Name – Mohammad Mohaghegh
1

Index
Sr.No.
Chapter-1
Title
Executive summary
Page Number
2-4
Chapter-2 Country profile and Afghanistan business 4-17
Chapter -3 Objectives of study 18-20
Chapter-4 research methodology 21-22
Chapter-5 Finding 23-52
Chapter-6 Suggestions and conclusions 53-54
Chapter-7 Limitation 55-56
Chapter-8 Bibliography 57-59
2

Chapter-I: Executive summary
3

Introduction:
This research project is undertaken under guidance of honorable
principal of VIM College, DR. Sharad jushi, and deputy principal, Dr.
shailesh kasande, to analysis the business opportunity of Afghanistan
and the threats associated that to with concentration on the geopolitical
important of Afghanistan as a pathway for energy transportation from
central Asian country to the south of Asia. The proposed gas pipeline of
Turkmenistan –Afghanistan-Pakistan most probably India is one of the
most important project which is offered to Afghanistan before ever
therefore, success and failure of this project as milestone of economic
progress can urge or discourage the foreign investment within the war
torn country, Afghanistan, geopolitical situation of Afghanistan as
corridor connecting the energy blessed Asian minor countries to the
huge consumption market in south of Asia, Pakistan and India, on the
other hand transit of finished goods of fast growing economy of south
Asian country to the 400 million market of central Asian countries
which is mostly land locked play a key factor for economic welfare and
prosperity of the region.
Historically looking towards Afghanistan revealed her key role by
connecting the east of the world, China and all eastern countries, to the
west up to Italy in Europe through the ancient pathway of “Silk Route “
but, this geographically importance location was not always in favor of
the country which led to the battle place between the big countries
during the 19 century and later on competition of east block and west
block result in invasion of Afghanistan by Former Soviet Union troops
by1979.long years of lawlessness and lack of legitimate central
government left Afghanistan as of the poorest and unsecured country
across the globe on the other hand converted that to the heaven place for
terrorist groups of foreign nationals.
4

Post 9/11 events turned the page and put the Afghanistan on the top
priority of international policy makers lead by United Nation, hence, the
new born political regime in Afghanistan based on election and
fundamental human rights values brought the rays of hope and opened
the new horizons to the Afghan people as a victims of violation of
humanitarian laws and war crimes.
Turkmenistan – Afghanistan-Pakistan, TAP, pipeline is the first
proposed project which is offered to Afghanistan after new political
frame work of the country, 2001, At this research all opportunities for
and threats to this project has been discussed and concluded.
Also, the most likely threats to this projects is been addressed with a
suitable suggestions based on reality by taken in to account the current
situation of the country and mutual relations of Afghanistan with her
neighbors and international alliance as well. At this research work the
problems and probable threats to the proposed project is been divided
and discussed in two folds internal factors and external factors.
Internal factors cover the challenges which might face the project due to
diversity of cultures and multi ethnicity by politically misusing of them
and usefulness of the projects by determination of the right pathway
besides the security issues as a risk factors and external factors covers
the alternative proposal, Iran- Pakistan-India, IPI pipeline, which is
weaken the TAP pipe line and also the availability of the so called huge
reserves of Gas in daulatabad field of Turkmenistan to pump up to
dispatch in Indian territory.
5

Chapter- II: country profile
History of business in Afghanistan:
6

Afghanistan is a land lock and mountainous country which is located in crossroad of
central Asia, Middle East and south Asia, Nearly three quarters of the country is covered
by mountains that range in height anywhere between 3,000 to 4,000 feet. Afghanistan is
bound to the north by the three republics of Turkmenistan, Uzbekistan, and Tajikistan; to
the east by Tajikistan and China; to the south by Pakistan; and to the west by Iran. Even
though, generally landlocked countries are not of great importance and are mostly poor
economic country.1 but Afghanistan due to its Geopolitical importance has a different
story. The history of Afghanistan is still memorizing the foreign invaders troops during
the 19th
century (the British soldiers). And the recent occupation of former Soviet Union
at the 80th
decade of 21 century all and all shows the importance of this small country
which the Afghans themselves called that ” Heart of Asia”
The history of business especially international business is dating back nearby 2nd
century BC, in Afghanistan since the silk road (silk route) was connecting the eastern part
of china, chang’an( at present day Xi’an City) to Italy at west of Europe through
Afghanistan.3 the geopolitically importance of Afghanistan made it attractive as a gate
way and cross culture of civilization between east and west. The principal source of
revenue in Afghanistan is traditionally comes from agriculture sectors Two decades of
war and political strife left the country's infrastructure in ruins and its people almost
entirely dependent on foreign aid. Afghanistan is remarkably rich in mineral resources.
There are currently more than 1,400 identified mineral deposits. These include energy
minerals such as oil, gas and coal as well as iron and copper deposits of world quality.
Furthermore known precious and semi-precious stones in Afghanistan include emerald,
jade, amethyst, alabaster, beryl, lapis lazuli, tourmaline, ruby, quartz, and sapphire.2
1- 44 countries of the world are without direct access to the seaport and shipping trade these countries are
known land lock countries which have not coastline.
Source< http://www.pubquizhelp.34sp.com/geo/landlock.html> assessed on Monday, July 23, 2007 at 12:8
am.
2- The source is < http://www.aisa.org.af/reasons.html> assessed on Monday, July 23, 2007 at 11:29am
7

but due to lack of proper investment on the rich sources of Afghanistan most of them left
untapped therefore, the economy of this country is still traditionally most dependence on
the agriculture and livestock industrial business still is at it’s infancy by small industries
like textiles, soap, furniture, shoes, fertilizer, cement, rugs and carpets which is
manufacturing for domestic market, at mid decade of 60 up to 80 natural gas was
exported to former Soviet Union succeeded by Russia. Medium and large scale of
industrial business is nearly not existed in the country most export of Afghanistan is
dependence on the agricultural products and raw material to the international markets.
The major business partners of Afghanistan are India, Pakistan, USA, UK, Denmark and
Finland.3
Map of Afghanistan
3- The world fact book of CIA, <https://www.cia.gov/library/publications/the-world-
factbook/geos/af.html> assessed on Monday, July 23, 2007 at 5:40 pm.
4- (Source is the world fact sheet by Central Intelligence Agency, 19Julay 2007)
8

Information regarding the economy of Afghanistan:
Afghanistan is mostly depending on the livestock and agriculture sector which accounted
for more than half percentage of the GDP and supporting by 85% of the people in the
country.5 the climate of Afghanistan is well suited for cultivation of horticultural crops
but Years of drought and civil conflicts caused to flee of farmers to neighboring
countries.
GDP comprising sector wise by 2001.6
Sectors: Percentage: %
Agriculture 53
Industries 28.5
Services 18.5
5-<http://www.aisa.org.af>, Afghanistan Investment opportunities with regional significance, assessed on
Monday, July 23, 2007 at 11:30 am
6- Sources, <http://geographic.org > assessed on Tuesday, July 24, 2007 at 2:11pm
9

The majority of administrative, economical, and social institutions was wiped out due to
the Soviet invasion, mass migration, and continued fighting. Before the Soviet invasion
in 1979, the economy was almost entirely controlled by the government of Afghanistan,
with most investments taking place within the public sector. The private sector extended
only to agriculture and trade. The past two decades have seen the dismantling of
centralized governance and an increase in private sector participation.7
Soon after fall of Taliban regime in 2001, The new born Government of Afghanistan is
trying to pave the path towards the economic prosperity of nation as whole by
simplifying the rules and regulations of trade and investment for domestic and foreign
investors by supporting of privatization which is back by new Constitution came to force
by 2003(article 10).8 The Government of Afghanistan passed a Law on Domestic and
Private Investment in 2002, which is intended to encourage and protect private
investment.Under this law, 100 percent foreign ownership is permitted, unlike other
countries where there are stricter joint-venture laws that restrict the amount of ownership
a foreign entity may have.9
7-<http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Afghanistan-OVERVIEW-OF-
ECONOMY.html> assessed on Monday, July 23, 2007 at 10:52am
8-<http://www.aisa.org.af >, Afghanistan Investment opportunities with regional significance, assessed on
Monday, July 23, 2007 at 11:30 a
9-<http:// WWW.AFGHANISTAN.BUSINESS-GATEWAYS.COM > ASSESSED ON Tuesday, July 24,
2007 AT 11:00 AM
10

share of economy sectorwise
Agriculture,
53%Industries,
29%
services,
18.50%
Agriculture
Industries
services
Sources is<http://geographic.org> in 2001.
Reconstruction and rehabilitation of war-torn country like Afghanistan is of crucial task
confronting the Government. Lack of good infrastructure, corruption and red tape in
government, shortage of capital, insecurity and lawlessness in some area of country,
inadequate of human resources are the serious problems for rehabilitation of economy as
a whole.10
Nevertheless, early after collapse of Taliban the private sector is growing fast close to
20% of companies currently operating in Afghanistan are run by expatriates who returned
after the new born government by 2001.11
10- Ibid
11-center for advanced defense studies, <http:// www.c4ads.org > assessed on Monday,
July 23, 2007
11

Industries:
Industry in Afghanistan is still in its infancy most business in industries running at small-
scale for domestic consumption like, text tiles, soap, fertilizer, cement. Afghan Rugs and
carpet industries are well known at global market. Oil production is limited and could not
meet even the domestic needs. Gas production was one of the vital exports of country at
mid 1960 till 1980 mostly by export to Former Soviet Union succeeded by Russia, by
now owing to low capacity of production and lack of proper maintenances all production
is used at domestic market.
Most industries, with the exception of the agricultural sector, export all of their raw
material abroad. Owing the inefficiency and outdate packing system of horticultural
products like nuts, pistachio, watermelon, raisin etc those product resell form Pakistan to
overseas in high price.
Unfortunately, due to years of civil strife and lack of accurate statistics and official
information the under mentioned figures derived from World Bank regarding doing
business in Afghanistan, The rate of unemployment in Afghanistan is nearby 53 % which
is worst rate of the region.
The composition of GDP by 2005:
According the World Bank the comprising of Afghanistan economy is:
Sectors: Percentage:%
Agriculture 36.1
Industries 24.5
Services 39.4
Economic indications of Afghanistan Economy according the World Bank in 2005
12

Economy Year 2005
GDP(current USD) 7.3 billion US$
GDP growth (%) 14
Inflation GDP deflator 11.9
Agriculture value added to (%GDP) 36.1
Industries value added to (%GDP) 24.5
Services value added to (%GDP) 39.4
Exports of goods and services (%GDP) 12.4
Imports of goods and services (%GDP) 55.7
Source: World Development Indicators database, April 2007.12
12. Source< http://www.worldbank.com.> Assessed on Monday, 23 July 2007 at 2:00 pm
Pie chart of GDP’s components of Afghanistan
13

GDP growth
rate, 14
inflation GDP
deflator, 11.9
share of
agriculture on
GDP, 36.1
share of
Industries on
GDP, 24.5share of
services on
GDP, 39.4
share of
export on
GDP, 12.4
share of
imports on
GDP, 55.7
GDP growth rate
inflation GDP deflator
share of agriculture on
GDP
share of Industries on
GDP
share of services on
GDP
share of export on
GDP
share of imports on
GDP
Landlocked and mountainous, Afghanistan has suffered from such chronic instability
and conflict during its modern history that its economy and infrastructure are in ruins,
and many of its people are refugees.
After the fall of the Taleban administration in 2001, adherents of the hardline Islamic
movement have re-grouped and are now a resurgent force, particularly in the south and
east. A fledgling democratic government faces the challenges of extending its authority
beyond the capital and of forging national unity.
14

Source, < http://media.maps.com/magellan/Images/AFGHAN-W1.gif> assessed on Monday, August 13,
2007 at 4:00 pm(13)
After the fall of the Taliban administration in 2001, adherents of the hardliner Islamic
movement have re-grouped and are now a resurgent force, particularly in the south and
east. A fledgling democratic government faces the challenges of extending its authority
beyond the capital and of forging national unity.
Its strategic position sandwiched between the Middle East, Central Asia and the Indian
subcontinent along the ancient "Silk Route" means that Afghanistan has long been fought
over - despite its rugged and forbidding terrain.
15

It was at the centre of the so-called "Great Game" in the 19th century when Imperial
Russia and the British Empire in India vied for influence.
And it became a key Cold War battleground after thousands of Soviet troops intervened
in 1979 to prop up a pro-communist regime, leading to a major confrontation that drew in
the US and Afghanistan's neighbors.
But the outside world eventually lost interest after the withdrawal of Soviet forces, while
the country's protracted civil war dragged on.
The emergence of the Taliban - originally a group of Islamic scholars - brought at least a
measure of stability after nearly two decades of conflict.
But their extreme version of Islam attracted widespread criticism.
The Taliban - drawn from the Pashtun majority - were opposed by an alliance of factions
drawn mainly from Afghanistan's minority communities and based in the north.
In control of about 90% of Afghanistan until late 2001, the Taliban were recognized as
the legitimate government by only three countries.
They were at loggerheads with the international community over the presence on their
soil of Osama bin Laden, accused by the US of masterminding the bombing of their
embassies in Africa in 1998 and the attacks on the US on 11 September 2001.
After the Taliban’s refusal to hand over bin Laden, the US initiated aerial attacks in
October, paving the way for opposition groups to drive them from power.
Infighting between local commanders over power and territory became a feature of the
post-Taliban period. The authorities in Kabul have been able to exert little control beyond
the capital and militant violence has continued.
Afghanistan's drugs industry makes up around 60% of the economy. The trade has
boomed since the fall of the Taleban and the country is the world's leading producer of
opium, the raw ingredient of heroin.
International bodies and governments say the drugs trade is helping to fuel the Taleban
insurgency in the south, where much of the poppy crop is grown.
16

Facts:
Full name: Islamic Republic of Afghanistan
Population: 26 million (UN, 2005)
Capital and largest city: Kabul
Area: 652,225 sq km (251,773 sq miles)
Major languages: Pashto, Dari (Persian)
Major religion: Islam
Life expectancy: 46 years (men), 46 years (women) (UN)
Monetary unit: 1 Afghani = 100 puls
Main exports: Fruit and nuts, carpets, wool, opium
GNI per capita: n/a
Internet domain: .af
International dialing code: +93
Media:
 The growth of private television stations has been a significant feature of the post-
Taliban Afghan media scene.
There are five large private TV networks and more than 40 radio stations. They command
large audiences and some of them rival the state broadcaster.
An Australian-Afghan media group, Moby Capital Partners, operates some of the leading
private broadcasters including Tolo TV and Arman FM.
Much of the TV output consists of imported Indian music shows and serials, and
programmers modeled on Western formats. The channels are very popular in urban
centers, especially among the under 30s.
However, media laws prohibit material that is deemed to run counter to Islamic law and
some private stations have drawn the ire of conservative religious elements. Press
freedom organization Reporters without Borders notes that media regulatory bodies are
"under the government's thumb".
17

Relays of foreign radio stations or stations funded from overseas are on the air in Kabul,
including the BBC, Radio France International, Deutsche Welle and US-funded
broadcasts from Radio Free Afghanistan, which uses the name Azadi Radio, and the
Voice of America, which brands its Dari and Pashto broadcasts as Radio Ashna
("Friend").
Internet access is scarce and computer literacy and ownership rates are minuscule.
Afghanistan's media were seriously restricted under Taliban rule. Radio Afghanistan was
renamed Radio Voice of Shariah and reflected the Islamic fundamentalist values of the
Taliban. TV was seen as a source of moral corruption and was banned.
Taliban radio re-emerged in April 2005; it was heard in Kandahar and was said to be
using a mobile transmitter.
The press:
 Hewad - government-sponsored daily
 Anis - government-sponsored daily
 Kabul Times - official, English-language pages
 Kabul Weekly - private, English-language pages
 Payam-e Mojahed - Northern Alliance weekly
Radio :
 Radio Afghanistan - run by state broadcaster National Radio-TV Afghanistan (NRTA)
 Radio Killid - private FM station, in Kabul and Herat
 Arman FM - private FM network, in Kabul and other cities
 Azad Afghan Radio - private, Kandahar
18

Television:
 National Television Afghanistan - run by state broadcaster (NRTA)
 Tolo TV - leading private network, Kabul-based, provincial relays
 Lemar TV - private, Pashto-language sister station of Tolo TV
 Aina TV - private, based in northern city of Sheberghan
 Ariana TV - private, Kabul-based, provincial relays
 Afghan TV - private, Kabul
 Balkh Province TV - local station, Mazar-e-Sharif
 Herat Province TV - local station, Herat
News agencies
 Bakhtar News Agency - state-run
 Pajhwok Afghan News - private
 Afghan Islamic Press - private, based in Peshawar, Pakistan .14
14 Source, <http://news.bbc.co.uk/2/hi/south_asia/country_profiles/1162668.stm> assessed on Monday,
August 13, 2007 at 3:19pm
19

Chapter-III:
Objectives of the study
20

Need of study:
The Importance of this study is related to the critical situation of Afghanistan
economically, politically, geographically and security concerns. Afghanistan has been
arisen from a catastrophic injustice system and military-political strife paving her way
towards the progress caravan along with international community. That is obvious that
every step towards of any movements is rooted to the deep understanding of the current
positions of the objective and realizing the potentiality and obstacles associated to that to
make a comprehensive plan for achievements of the goals and objectives of any respected
organization. For this purpose every move for changes must follow an exact pathway
which is only possible through a scientific research and academic activities. Economic
progress and welfare of society of any war-torn country like Afghanistan must be on the
top priority and hub of Afghan policy makers and supporting of donor community.
Hence, this study is trying to find a way and best course of actions among the several
alternatives to build a sustainable economic progress with a factual view of geographical,
political, social, historical and demographical conditions of Afghanistan. The past history
of our country shows that all economic planning for betterment of the society is been
failed due to lack of the scientific research and accurate estimations of actual problems on
the other hand weakness of implementations and shortage of human resource and
capitals.
Background of study: according to the author there is no academic research on this issue
as a whole but some theses is done by handful of Afghan students in foreign countries
concentrated on traditional productions of Afghanistan like, wool, carpet, textiles, dried
fruits, animals skins, agriculture and horticultures products. Foreigners also has done
some researches on the well-known economic products recently some authors tried to
make a link between the post 9/11 military operations in Afghanistan and economic
desires of the some big countries especially United States of America over the Asian
Minor by erecting a democratic and strong central government in Afghanistan.( Ahmad
Rashid the Pakistan Author). But all such opinions have two big with draws. First most of
21

them only emphasized on the small area and left the rest of chain of that like researches
on the agricultures but did not look for the transportation and infrastructures for export
and make more benefits for producers. Second, some researches is only political oriented
without consideration towards to actual needs of Afghan people like view point of
Ahmed Rashid , the Pakistani author, . Therefore, this study is trying to review the
economic projects and feasibility of each of them on view point of Afghanistan, the
forgotten ring, as well as economic progress of region as a whole. The main aim of this
work is to show that a developed, secured, democratic, stable and welfare state in
Afghanistan directly and indirectly would result to the prosperity of all regional countries
and international security as well.
Primary Objectives and secondary Objectives:
This project is carry out in order to determine the area of interests of business
opportunities in Afghanistan with emphasize on the geopolitical importance of
Afghanistan as corridor to connect the central Asian rich energy countries to the south
Asian developing countries and as a pathway to re-export of industrial and capital
products to central Asian countries. Therefore, the core objective of this project:
Primary Objective:
- is overview the economic capacity of Afghanistan it self and most likely challenges
threatened that.
Secondary objective:
- Analysis of feasibility and economically worth of the projects.
22

Chapter-IV:
Research Methodology
23

Research methodology:
The research methodology has been used at this project is exploratory research and based
on the secondary data which is collected through browsing the relevant websites In order
to discover the new ideas and insights over the hypotheses of research.15
For this purpose the methods which is used is through the review the survey of the
available literatures which is collected by browsing the web sites, afghan web sites and
foreign as well, that already is been published. The scope of the research is covered the
general picture of Afghan economy as whole concentrating on the energy point of view,
Gas &Oil, the available proposals , limitations, prospects, feasibility of each and role of
foreign investors on promotions and backing each of them.
Sources of data which is gathered is based on the information released on the relevant
websites, review of some literature that is done based on the Afghanistan scenario by
handful of authors then released on the web sites by means of articles, interview, round
tables discussion, review of news agencies about the Afghanistan political and economic
situations. But, due to the lack of accessibility to the reference books most portion of this
project is not covered as well as was predicted.
15-C.R Kothari, research methodology-methods & techniques , new age publications pp.3-10
24

A) Introduction:-
Findings:
Afghanistan was not well known for the ordinary people before the 9/11 terrorist attack
on the twin tower of the trade center in USA even though it was on the hub of foreign
policy of super power countries, invasion of British soldiers at 19th
century, competition
of Russia with England to control over the Asian minor countries kept Afghanistan as
buffer between them during the 20th
century. Establishment of communist oriented
government in Afghanistan late of 1970th
by support of Former Soviet Union brought the
country again on the top priority of competition between the bilateral polar powers, USA
and Former Soviet Union, political instability and changing the different government’s
right after the independence year 1919 has been made this rich resource country one of
the top ten poorest state through out the globe. Lack of proper and comprehensive
planning, shortage of adequate Human Resource and capitals, weakness of the central
government on implementation of the developing program especially during the 70th
and
80th
decades, red tape and corruption on the government sectors then direct invasion of
Soviet Union, civil war and conflicts among the different political parties all and all has
put the country on the worst situation.
With looking to the background of Afghanistan it’s easily understandable that instability
of central government and injustice and inequality across the country is of major reason
of poverty and civil conflict of this diversified and multiethnic country. Hence, this
project is trying to find a rational way, rightful and justified course of action among the
available alternatives to pave the way for the future welfare and prosperity of the nation
as whole regardless the different social based.
26

Energy overview of Afghanistan: (Gas & Oil)
Being landlocked country, poor infrastructure system, decades of political instability and
breach of Human Rights, vacuum of good government and corruption at governmental
sectors has been made Afghanistan one of the poorest economic country across the
world. Even though most landlocked countries are economically weak but in case of
Afghanistan owing to her great geopolitical location as land-bridge connecting the Asian
minor and china to southeast Asia then European countries play a vital role towards the
future economic welfare and political stability of region as whole. At this research I
would like to concentrate on Afghanistan for it’s” geopolitical location” as one of the
strategic and vital pathway of central Asian rich reserves energy. Hence, the most
objectives of this topic is overview the available natural resources of Afghanistan and its
capacities to recover the post conflict economic country. In addition study of probable
energy route of central Asia through Afghanistan, Gas & Oil pipeline, to consumption
market of south Asia. Unlike its current position Afghanistan is one of the rich natural
resources countries throughout the region. The identifying and utilizing the energy in
Afghanistan traced back to the 1960’s
and midst of 1980 by the help of the former Soviet
Union. (16)
16-<http://www.eia.doe.gov/emeu/cabs/afghan.html> assessed on Saturday, July 28, 2007 at 12:56 pm
27

By technical help of Soviet Union, Afghan Government had identified more than 15
fields of gas and oil at northern part of country. Of them only three fields of khwja
Gojerdagh , Djurquduk, Yatimtaq were developed on the area of shebourghan district
which is located 120 km nearby Mazar-i- Sharif. The production of natural gas was
reached around 275 million cubic feet per day at the mid 1970’s. Later on at boost period
of natural gas output of country it’s reached up to 385 million cubic feet per day which is
used for domestic needs of northern part of country itself .out of them around 70 to 90
percent of out put was export to former Soviet Union through Uzbekistan Pipe line.(17)
Based on scientific researches of Russian advisors Afghanistan proven gas deposit is
more than 5 trillion cubic feet. Afghan Investment support Agency cited to the U.S
Geological survey and the ministry of Mines and Industry indicate that the Afghan-Tajik
and Amu Darya Basins contain 18 times the oil and triple the natural gas reserves
previously determined. 15.7 trillion cubic feet of natural gas has been discovered in the
Amu Darya Basin. (18) as mentioned the identification of energy resources in Afghanistan
is dated back to the 1970’s especially during the soviet back government in Kabul
therefore, the identified and developed fields of Gas &Oil is very limited and needs more
researches. Most available resources are untapped and use fro local needs.
17-<http://www.eia.doe.gov/emeu/cabs/afghan.html> assessed on Saturday, July 28, 2007 at 1:20 pm
18-<http://meaindia.nic.in/srec/internalpages/inafgan.pdf>.Assessed on Saturday, July 28, 2007 at 2 pm
28

Developed gas fields of Afghanistan:
Name of gas fields Particulars:
Sheberghan area Gas
Filelds
The Djarquduk, Khowaja Gogerak, and Yatimtaq natural
gas fields are all located within 20 miles of Sheberghan.
Pipeline to Mazar-i-Sharif A pipeline connects these natural gas fields to Mazar-i-
Sharif. Limited amounts of gas currently is supplied to a 48-
MW power plant near Mazar-I-Sharif (which is operating at
less than one-third full capacity) and for the 100,000 mt/y
fertilizer plant, which is partially operational.
Local pipelines Small-diameter pipelines supply gas to the Khwaja
Gogerdak and Djarquduk gas fields with Sheberghan and
nearby villages.
Acording the Ministry of Mine and industry the existing gas pipeline is as belove:
Form jarquduk to khwoja Gogerdak( 40 km)
From Acha to Acha city (10 km)
From Sheberghan to Jarquduk (13 km)
From Khwoja Gogerdak to Cleft (100 km)
From Khwoja Gogerdak to fertilizer company (89.1km)
From Yatimtaq to Jarqo Doq (28km)
From Acha Roundabout to Mazare sharif (63km0
All these zones are located in northern part of country that is nearby the gas fields.
Therefore, transfer of gas to major consumptions cities needs a huge investment on the
pipeline to make network throughout the country. From 15 current identified gas and oil
fields just 3 of them are developed but most of them are untapped in addition lot of
research has left for more scientific researches for future finding.
Afghanistan Oil reserves:
Oil resource in Afghanistan still not identified properly due to more than two decades of
civil conflict no scientific researches has been done to realize the exact picture of oil in
Afghanistan ,however, by technical assistance of former Soviet Union only one oil field
is identified then later on developed, Angot Field, at sar-I pol District of Jawzjan
29

Province at north of Afghanistan nearby Gas reserve at sheborghan district. , Angot, was
developed in the late 1960s but aside from production tests, oil production was
intermitted, with daily outputs averaging 500b/d or less.
Afghanistan’s crude oil potential is more modest, with perhaps up to 100 million barrels
of medium-gravity recoverable from Angot and other fields that are undeveloped.
Afghanistan also may possess relatively small volumes of gas liquids and condensate.
Outside of the North Afghan Platform, very limited oil and gas exploration has occurred.
Geological, aeromagnetic, and gravimetric studies were conducted in the 1970s over
parts of the Katawaz Fault Block (eastern Afghanistan – along the Pak border) and in the
Helmand and Farah provinces. The hydrocarbon potential in these areas is thought to be
very limited as compared to that in the north of Afghanistan. 19
According to the soviet estimation the current oil reserve of country is around 95 million
barrels.20 but according the Afghan Investment Support Agency, the Official Afghan
business information, the total reserves of the Oil are estimated to be at 88 million
barrels. (21)
Afghanistan as land bridge not mere its own reserves but as pathway connecting the
Caspian Sea Gas& Oil at central Asia to Arabian sea , where the huge consumption
market is needed for, Hence, Geopolitically importance of Afghanistan is very important
for international game for energy. Middle East as a major reserve and supplier of Oil is
on the business and political hub for regional and international powers. Dependency of all
developed and developing countries which most of them are poor natural resources on the
crude oil of gulf region and other hand growing the terrorism and violations at this region
that allegedly are Arab based Groups like Al-Qaeda increasing the concern for finding
the alternatives and diversifying for energy supply .
War in Iraq, attempting of Iranian Government to reach to the nuclear power ,which
blamed by USA access to the nuclear weapons, arising some serious questions
confronting on the security of region and increasing the price of crude oil as well.
19-<http://www.eia.doe.gov/emeu/cabs/afghan.html >assessed on Tuesday, July 31, 2007 at 3:15pm
20- ibid
21- <http://meaindia.nic.in/srec/internalpages/inafgan.pdf> assessed on Tuesday, July 31, 2007 at 3:26 pm.
30

Why Afghanistan is important from energy stand point:
At the era of cool war between USA and former Soviet Union at 1960s Afghanistan was
important as buffer between those super powers but after disintegration of Soviet Union
and independence of new born central Asian republics some serious questions is been
arisen for the transportation of the rich gas & oil reserve of Caspian sea . Because all of
these republics are landlocked countries even Uzbekistan is double land locked the, land
lock country which is surrounded by land locked neighbors,
Most republics of central Asia is dependent to Russia to export their gas and oil abroad.
But Russia is buying their gas and oil cheaper than market price and resells that at high
price to European countries.
As Ahmed Rashid quotes in Taliban (169), "peace can bring a piepline, but a pipeline
cannot bring peace."
Afghanistan identified reserves is not enough well known for the world famous energy
supplier throughout of the world. So, the key question which is arise is why the
Afghanistan is important and on the hub of international great game for the Energy?
The answer is even though the proven and identified and somewhat developed fields of
Gas and oil in Afghanistan are still limited as far as the international market demand is
concern, around 5 trillion b/d Gas and nearby 99 million barrels of Oil, estimated by
Russia. But, the god given geopolitically important location as a corridor of rich reserves
landlocked countries of Asian Minor to the thirsty energy market at south Asia and
Europe made Afghanistan vital and crucial for the policy of big advanced countries like
Russia and USA.
31

The largest gas reserves of the world accordingly by (2005)
22 largest gas fields in the world
Field of country Estimated of reserves
1. North Dome - South Pars, Qatar-Iran up to 1,200 trillion cubic feet (950 in Qatar)
2. Urengoy, West Siberia, Russia 275 trillion cubic feet
3. Yamburg, West Siberia, Russia 200 trillion cubic feet
4. Orenburg, Volga Region, Russia 200 trillion cubic feet
5. Shtockmanov, Barents Sea, Russia 200 trillion cubic feet
6. Umm Shaif + Abu el-Bukush, Abu
Dhabi
175 trillion cubic feet
7. Zapolyarnoye, West Siberia, Russia 150+ trillion cubic feet
8. Kharasevey, West Siberia, Russia 150+ trillion cubic feet
9. Bovanenko, West Siberia, Russia 125 trillion cubic feet
10. Medvezh'ye, West Siberia, Russia 100+ trillion cubic feet
11. Hassi R'Mel, Algeria 100 trillion cubic feet
12. South Pars, Iran 100 trillion cubic feet
13. Panhandle-Hugoton, USA (TX-OK-
KS)
80 trillion cubic feet
14. Groningen, Netherlands 66 trillion cubic feet
15. Ghawar Oil Field, Saudi Arabia 60 trillion cubic feet
16. North Pars, Iran 48 trillion cubic feet
17. Dauletabad-Donmez, Turkmenistan 47 trillion cubic feet
18. Karachaganak, Kazakstan 46 trillion cubic feet
19. Shatlyk, Turkmenistan 35 trillion cubic feet
20. Yashlar, Turkmenistan 27 trillion cubic feet
21. Blanco (San Juan), USA (NM) 23 trillion cubic feet
22.Gazli, Uzbekistan 20 trillion cubic feet
Source, <http://www.gravmag.com/oil.html >
The above mentioned is the active and developed fields of natural gas throughout the
world. Among 22 largest fields of natural gas 5 of them is located at central Asia which is
supposed to export their products to overseas by use of their neighbors territories. Hence,
the Afghanistan can play a key role for the international huge market of developing
countries, China, India and even Pakistan. According the ministry of petroleum of
Pakistan his country is most economic dependent on gas all over the world. (22)
Caspian Sea geographical and political landlocked:
32

The central Asian republics are geopolitically and politically dependence on the Russia’s
monopoly. Therefore, all of these countries trying to find new alternatives pathways for
exporting their gas and oil to overseas at market prices. Dependency of the cuscuses’
countries on the Russia caused them to seek a way for diversity demand for their energy
product. As Sapar Murad Nyazof, the former president of Turkmenistan, said he “smelled
old soviet ambitions” in Russia’s use of its pipeline monopoly to keep Turkmenistan’s
gas from competing with Russian gas in European markets” (23) The Caspian Sea region
has become a central focal point for untapped oil and natural gas resources from the
southern portion of the former Soviet Union. Beginning in May 2005, oil from the
southern sections of the Caspian Sea began pumping through a new pipeline (built by a
BP-led consortium) to the Turkish seaport of Ceyhan. The 8-year effort of Western
capital, technology, and diplomacy had aimed to decrease reliance on Middle Eastern oil.
Although oil reserve growth in the Caspian region has not met levels that had been
expected in the 1990s, European countries are paying special attention to the natural gas
resources that could lie beneath the Sea as a way to diversify their sources of gas imports.
Not even the energy consumers seeking to diversify the gas and oil supply for more
security and fair price, the producer countries at central Asia trying to have more
demands and freedom of setting the price of their production based on the international
market. As mentioned before the most gas and oil reserves is still untapped at this region
and ready for forthcoming progress the recent discovery of Oil reserve at Kashagan field
as fifth largest reserves of oil across the world and great discovery of world in the past 20
years.(24) due to Russia monopoly on the gas resources of the central Asian republics
they bought their gas cheaper than international market to Russia that is not in favorite of
them for instance, Russia bought about 42 billion cubic meters of Turkmen gas last year
at $100 per 1,000 cubic meters, well below its $250 price for customers in
Europe.4Following the disintegration of Union of Soviet Social Republics, USSR, by
1991 and establishment of the new born republics at central Asia on the other hand
interest of US based companies and other western countries plus the regional powers like,
Russia, China, Iran and Pakistan put the new born states on their top strategies of the
regional and international plan.
33

22-<http://members.localnet.com/~jeflan/jfafghanpipe.htm> assessed on Monday, julay 30, 07, 07 at
4:25pm
23-<http://www.eia.doe.gov/emeu/cabs/afghan.html >assessed on Tuesday, July 31, 2007 at 3:15pm >
24-source <http://members.localnet.com/~jeflan/jfafghanpipe.htm> assessed on Monday, julay 30, 07, 07 at
4:25pm.
.
Huge reserves of Gas & Oil, being land locked of the 5 central countries, increasing
demands for oil and gas across the world especially the energy –hungry of Asia like
Japan, China, India and Pakistan has made a great sophisticated international game over
the security and energy of the region before ever.
34

Source, Energy Information Administration, 25
the recent discovery of Oil reserve at Kashagan field as fifth largest reserves of oil across
the world and great discovery of world in the past 20 years. (26) Due to Russia monopoly
on the gas resources of the central Asian republics they bought their gas cheaper than
international market to Russia that is not in favorite of them for instance, Russia bought
about 42 billion cubic meters of Turkmen gas last year at $100 per 1,000 cubic meters,
well below its $250 price for customers in Europe.
25-<http://www.eia.doe.gov/emeu/cabs/afghan.html> assessed on Tuesday, July 31, 2007 at 3:15pm >
26-<http://www.silkroadstudies.org/new/docs/CEF/Quarterly/November_2006/Liao.pdf>
assessed on Wednesday, August 01, 2007 at 1:21 pm
36

Regarding the total amount of oil and gas reserves of central Asia there is not accurate
pictures due to the variations of the one source to another according to some estimation
"The combined total of proven and estimated reserves in the region stands at more than
800 billion barrels of crude petroleum and its equivalent in natural gas. By contrast, the
combined total of oil reserves in the Americas and Europe is less than 160 billion barrels,
most of which, energy experts say, will have been exhausted in the next 25 years."(27)
Following the disintegration of Union of Soviet Social Republics, USSR, by 1991 and
establishment of the new born republics at central Asia on the other hand interest of US
based companies and other western countries plus the regional powers like, Russia,
China, Iran and Pakistan put the new born states on their top strategies of the regional and
international plan. Huge reserves of Gas & Oil, being land locked of the 5 central
countries, increasing demands for oil and gas across the world especially the energy –
hungry of Asia like Japan, China, India and Pakistan has made a great sophisticated
international game over the security and energy of the region before ever.
27- <http://socrates.berkeley.edu/~pdscott/q7.html> assessed on Saturday, August 04, 2007 at 12:27 pm.
37

The TAP route of Gas and Oil from central Asia to Overseas:
Transit Afghan Pipeline or, Turkmenistan, Afghanistan and Pakistan pile line, is one of
the probable and short routes for export of rich natural resource countries in Central Asia
to international market. Being landlocked country is catastrophic for economy of every
country especially Afghanistan that has not a basic infrastructure for future economic
development. In addition years of war with former Soviet Union then civil conflict all
over the country made it one of the poorest and needed countries throughout the world.
Before the disintegration of Soviet Union Afghanistan just was as a buffer between East
and West afterwards by instability of political system and further civil war among the
Afghan political parties nobody was though that Afghanistan would become part of chain
for economic prosperity of its region at Central Asia.
The first proposal for transfer of gas and oil of Caucasus countries through Afghanistan
was announced by Bridas Company LTD, the Argentina based company, The plan
advocated by Carlos Bulgheroni, CEO of Bridas, was simple: to connect Central Asia's
energy riches with the Indian subcontinent and international markets, through a pipeline
to be built from Turkmenistan through Afghanistan, ending in Pakistan. Getting gas from
Dauletabad through Afghanistan to Pakistan and into India is also riddled with legal
hurdles. The very first company that came up with the idea was The Bridas Group, an
Argentine company. The Government of Turkmenistan commissioned Bridas to map the
geology of a north-south pipeline. In 1995, the Benazir Government, Pak PM, also
granted construction rights to Bridas. In 1996, Bridas obtained a 30-year concession from
the Rabbani Government, Afghan president, to build an 875-mile gas pipeline. (28)
Soon after the Bridas company agreement with three countries by that time Unocal, the
California based oil giant, had woken up. Unocal hired Henry Kissinger, Robert Oakley
(one-time U.S. Ambassador to Pakistan), and Richard Armitage (the current deputy
defense secretary) to do its lobbying. Both Benazir of Pakistan and Niyazoy of
Turkmenistan were pressurized to break their deal with Bridas (for Unocal?s benefit).
Bridas, in return, filed a suit with the International Chamber of Commerce and won. (29)
28-<http://forums.bharatrakshak.com/viewtopic.php?t=93&sid=871b15b13bae2bfe433bcb8835803d7e>
assessed on Saturday, August 04, 2007 at 1:48pm
38

29- ibid
But due to increasing of Taliban rule across the country afterwards controlling of 90% of
the afghan territory once again the UNOCAL Company approached the Taliban
headquarter in Kandahar South of Afghanistan to make a contract, later on, the Taliban
Faction send some representative to USA to meet the UNOCAL official but because of
Taliban restriction against women rights and unease security situation in Afghanistan led
to the retreat of Unocal from Afghanistan till the democratic and legitimate government
come to power this projected halted.
Soon after the establishment of new government following the fall of Taliban Afghan
government made an agreement with Turkmenistan to export its huge gas resources to
south Asia by the Afghanistan corridor. This 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. (30)
Source, BBCFriday, 27 December, 2002, 11:23 GMT
Mr Razim, the former minister of mines and industry of Afghanistan in 2002, said US
energy company Unocal was the "lead company" among those that would build the
pipeline, which would bring 30bn cubic meters of Turkmen gas to market annually.
Unocal - which led a consortium of companies from Saudi Arabia, Pakistan,
Turkmenistan, Japan and South Korea - has maintained the project is both economically
and technically feasible once Afghan stability was secured.
39

30-< http://news.bbc.co.uk/2/hi/south_asia/2608713>.stm> assessed on Tuesday, August 07, 2007 at 11:22
am.
"Unocal is not involved in any projects (including pipelines) in Afghanistan, nor do we
have any plans to become involved, nor are we discussing any such projects," a
spokesman told BBC News Online.'(31)
Benefit for Pakistan:
Apart from an estimated $700m royalty from the transit facility, Pakistan would also be
allowed to purchase $200m worth of gas at a cheaper rate. With the availability of
sufficient cheaper gas, Pakistan can convert its industries currently using electricity and
furnace oil to natural gas. The availability of more natural gas would also reduce reliance
on firewood for domestic use, especially in the far-flung and marginalised areas, that in
turn would help stop the rapid deforestation in the country. Similarly, Pakistan spends
$3b annually on the import of oil for industrial and transportation purposes. A significant
saving could be made in that regard. Overall, on an immediate basis, Pakistan would
benefit to the tune of $6bn, which would give a tremendous boost to its economic growth
rate. (32)
Benefit to the Turkmenistan:
Turkmenistan would be the biggest gainer from the construction of the TAP pipeline.
With the construction of this pipeline Turkmenistan’s vast natural gas reserves would be
open for export to new international markets, and would bring huge monetary returns to
the country. Currently, pipelines across Russia are the main outlets for Turkmenistan’s oil
and gas exports, which offer limited scope and potential due to the Russian control.
31-< http://socrates.berkeley.edu/~pdscott/q3.html> assessed on Tuesday, August 07, 2007 at 11:30 am
32-<http://www.opinion.com.pk/articles/4/Revival-Of-Trans-Afghanistan-Gas-Pipeline-Project/3> assessed
on Saturday, August 04, 2007 at 1:00pm
40

Benefit for Afghanistan:
The prime needs of the Afghan State and society are stability and reconstruction. After 23
years of war the Afghan economy is in shambles. Its population is displaced, youth
unemployed, and infrastructure in rubbles. The new government lacks hard cash and
other resources to cope with the demands. The TAP pipeline project would prove a
jackpot for the people of Afghanistan as the project would bring in over $300 m as
royalty to the country. The inflow of this cash and foreign investment would help in
stabilizing the country’s economy, and in reconstructing its infrastructure.(39) on the
other hand this pipeline can reduce of rely of afghan farmer on the poppy production by
providing the job opportunities for lot of people in Afghanistan another advantages of
this pipeline for Afghanistan is to build a road linking Turkmenistan with Pakistan
parallel to the pipeline, to supply nearby villages with gas, and also to pump Afghan gas
for export, Mr Razim , the former minister of mines and industry ,said. (33)
The government would also earn transit fees from the export of gas and oil and hoped to
take over ownership of the pipeline after 30 years, he said.
33-<http://news.bbc.co.uk/2/hi/business/1984459.stm >assessed on Tuesday, August 07, 2007 at 12:00 pm
The feasibility of TAP Project:
The construction of the 850-kilometre pipeline had been previously discussed between
Afghanistan's former Taliban regimes; US oil company Unocal and Bridas of Argentina.
The project was abandoned after the US launched missile attacks on Afghanistan in 1999.
Feasibility and implementation of this pipeline depends upon regional and international
agreement to secure the dream pipeline to real one. Asian development Bank, ADB, is in
charge of doing research for the feasibility of this pipeline which is supposed to be 1700
kilometers to transfer up to 20 billions of natural gas annually from the daulatabad field
41

of Turkmenistan to consumes markets of Pakistan and possibility India through
Afghanistan., the construction of this project is estimated around $2 billions or $2.5
billions that will take time 4 years after the finishing of necessary formalities among the
tree parties.
The initial phase of the TAP foresees the construction of a gas pipeline from
Turkmenistan’s Dauletabad-Donmez gas fields to the Pakistani deep-sea port at Gwadar,
or via Lahore to Amritsar in India, with provisions for the addition of an oil pipeline in
the future, so that construction costs can be contained. Depending on the route, the
pipeline will be either 900 or 1100 miles in length, with estimated costs reaching $3.5
billion. There are two different options for the pipeline route through Afghanistan – either
via Herat-Sokhab and Kandahar to Multan and Fazilka, or through Northern Shibirgan-
Mazar-i Sherif and Kabul to Peshawar, Lahore and eventually Amritsar. The second
alternative has appealed more to the Tajik, Uzbek, Turkmen and Hazara peoples of
Afghanistan because it passes through their lands. In fact, a pipeline could provide a
common interest to the many long-alienated and disparate ethnic groups of Afghanistan.
(34)
34-<http://www.cacianalyst.org/files/20050420Analyst.pdf> assessed on Monday, August 06, 2007 at
12:37pm
Is It possible or dream pipeline?
The serious question upon this pipeline is whether this pipeline is possible or just an
economic dream? In fact the TAP pipeline is pioneering effort to bring the prosperity to
the most worst geopolitical region of the World, central Asian country, being landlocked
and dependency on Russia for export of their gas and Oil made them poor. In addition
Afghanistan is war-torn country which passed a bloody civil conflict with destruction of
all her major infrastructures. Though, this pipe line which is consisted of two project Gas
& Oil will bring the Economic growth and social welfare to Afghan society and central
Asian nations as well.
42

But, there is lot of problems which is confronting the possibility of this pipeline
according the ADB, Asian Development Bank, the important issues which is vital and
essential for this Pipeline is 5 area;
Confirmation of market for this pipeline in Pakistan and India as well and commitment of
potential buyers to inter into sale and purchase of that
Certification that the daulatabad Field reserves can feed for over of 25 and 30 years.
Security concerns of Pakistan and India with regard to possible disruption of gas supplies
through pipeline
Techno-economic feasibility of the pipeline and preparation of its basic design
considering the terrain conditions and logistical constraints
Required mobilization of international gas and oil companies to take a lead role in the
pipeline consortium for timely and cost efficient construction of the pipeline and
operation and maintenance of the same in accordance with that international standard (35)
35-<http://www.adb.org/Documents/TARs/REG/tar_stu36488.pdf> assessed on Tuesday, August 07, 2007
at 1:00 pm
43

The proposed different pathways of the project. (36)
36-Source, < http://www.adb.org/Documents/TARs/REG/tar_stu36488.pdf > assessed on Tuesday, August
07, 2007 at 12:34 pm
44

The likely drawbacks of the TAP pipeline:
The drawback and weakness of this project is divided to two folds, internal and external.
As we know Afghanistan has been arisen from very worst situation of civil war and later
on some years of ruling of the Taliban extremist political regime. Hence, recovery of
political and economic system of country up to standard level to encourage the
international giant Energy Company to invest in Afghanistan is of great task confronting
the new-born democratic state
Internal factors:
A: security-
With a glance view to the five major area which is addressing by ADB, for the feasibility
of the project besides of all technical needs and investment for that by big Energy
companies all and all depends on variable indicators which is very crucial to grant them.
Security of Afghanistan itself to provide the peaceful condition for investors and
maintenance of the pipeline is very vital and hard task for the Afghan Government but
growing the central state authority throughout the country is good news for the security
point of view of this project. Even though, the security concern is better than before ever
but the anti -government, Taliban and Al-Qaeda group must not forget due to probable
interruption that they would make to challenge the security of the country as whole.
According the author even though they can not change the substance of the government
and sacrifice the democratic regime but they have potential to change the tone of
progress. Recently, seizing of the Korean church by the way of Kabul to Ghazni in 19th
of
July 2007, the city that located near the Capital, at the day light demanding releasing of
the Taliban leaders in governmental jail and ransom for the freedom of the Korean
captives has been a headlines of newspapers across the globe and underlines the security
power of the central government.
Therefore, it’s obvious that the pipeline brings the peaceful life and economic welfare but
its can not granted the peace and security. In fact peace and security is pre-conditions of
pipeline.
45

B: the pathway of the pipeline within Afghanistan:
The second internal factors which is important to take into consideration by the Afghan
policy maker and foreign exports to map the pipeline by design and implementation
phases is the route that its supposed to pass until dispatch to Pakistan.
There are two available options to transfer gas and oil through Afghanistan.
A: Via Herat-Sokhab and Kandahar to Multan and Fazilka in Pakistan
B: Through Northern Shibirgan-Mazar-i Sherif and Kabul to Peshawar, Lahore and
possibility India. The second alternative has appealed more to the Tajik, Uzbek, Turkmen
and Hazara peoples of Afghanistan because it passes through their lands. In fact, a
pipeline could provide a common interest to the many long-alienated and disparate ethnic
groups of Afghanistan. (37)
Depends to which route is select by the government the length of pipeline vary between
800 up to 900 miles ( 1287 up to 1448 kilometers) based on estimation of central Asian
analyst institute but according the Asian Development Bank , ADB, it’ll be around 1700
kilometers. Due to large estimation of distance by ADB it’s seems to across the second
available option. (38)
37-<http://www.cacianalyst.org/files/20050420Analyst.pdf> assessed on Monday, August 06, 2007 at
12:37pm
46

38-ibid.
The external drawback of this project is parallel and alternatives pipeline:
The most likely drawback of this project is alternatives pipeline and capacity of the
daulatabad field reserves of Turkmenistan to pump the 20 billion c/b per year, one of the
risk factor of this pipeline is availability of sufficient gas to pump through pipeline to
international market and second is alternative pipeline of Russia and Iran.
A: Capacity reserve of daulatabad field of Turkmenistan:
One of the major risks of this project is reality of available gas reserves at Turkmenistan.
According the Central Intelligent Agency of the USA the proven reserves of the
Turkmenistan Gas is 2.01 trillion C/F (39) in April 2003; Turkmenistan has signed a long
term contract with Russia to export all of her gas reserves to Russia during 25 years.
On the other hand, Turkmenistan has signed a contract with China to export 40 bcm
annually to china. Due to several contracts of Turkmenistan some people believe that
there are no sufficient gas reserves for TAP pipeline. (40)
B: alternatives pipeline IPI:
The second withdraw of the TAP is Iran, Pakistan, India pipe line, IPI, which is called
peace pipeline. Because the key importer of this pipeline is India with its booming
economy which is need to more gas and oil .parallel to TAP pipeline the Indian
Government is in negotiation with Iranian counterpart to sign the contract to import the
Gas from Iran via Pakistan. Still some debates are going on to make a tripartite contract
between the three countries. There is some lobbying among the pro-Iranian and pro-US
sides to promote the benefits and advantages of their interest pipeline. (41)
39- The world fact book. <https://www.cia.gov/library/publications/the-world-factbook/geos/tx.html>
assessed on Thursday, August 09, 2007 at 3:12 pm
40-marxist thought online <http://www.politicalaffairs.net/article/view/3567/1/190> assessed on Thursday,
August 09, 2007 at 3:30 pm.
47

41-ibid
As well as India there is some serious debate among the Iranian petroleum and some
experts upon the IPI pipeline.
Mr. Nejad Hossainian , The retired deputy of Iranian petroleum Ministry , blamed the
government that is trying just to make a contract rather than take into consideration the
national interest . He added that due to move the gas and oil price up why we should
jeopardize our national resources by offering the more than 30% discount. The current
price of gas is $11 per C/F while we offered $6.5 per C/F to India and Pakistan Mr.nejad
Hossainian says. BBC reported. (42)
India’s role at TAP pipeline:
On the consumption stand point, India is a key player in TAP pipe line and IPI as well.
The huge consumption market of developing economy of India is of crucial important for
both project whether Iran-Pak- India or Turkmenistan – Afghanistan- Pakistan. India’s
growing economy with reliance on the import energy from abroad is playing the positive
and important role for the success and failure any of the projects. India's current gas
reserves of 82tcf are insufficient to meet soaring demand for fuel from power stations as
well as buses and taxis that have converted to natural gas in India's cities. Imports are
essential. (43)
42-<http://www.bbc.co.uk/persian/business/story/2007/07/070730_ka-gas-iran-pakistan-india.shtml>
assessed on Thursday, August 09, 2007 at 4:28 pm
48

43-source,<http:// www.atimes.com> by By Siddharth Srivastava, assessed on august 15 at 11:00
am.
Due to increasing use of natural gas in Indian market; India is trying to find a sustainable
and cheap supply of energy to meet its industrial needs. Role of India in TAP pipeline is
just as a great importer of huge reserves of central Asian country in its common border
with Pakistan. As mentioned before one of the major concern of TAP pipeline is entering
of India in to contract as an importer of Turkmenistan natural Gas which is quoted by
Asian development Bank as one of the five areas of the concern for feasibility of that
project. Therefore, India’s role is win-win situation at any of the two proposed projects
but feasibility of each is mostly depends on the India’s will to import. So that which
project is on favor of actual demands of India?
Which pipe line is on favor of India? IPI or TAP project?
On security stand point both projects is across the Pakistan which is consider one of the
risk factor of both due to tense relations between India and Pakistan.
What are the advantages and disadvantages of IPI?
One of the problems which is associated with the IPI pipeline for India is:
1- Uncertain condition of tariff and transit fee between India and Pakistan.
2- The high price of dispatch of natural gas on Indian Territory. Tehran is demanding
$7.20 per million British thermal units, linked to global crude-oil prices. The Iranian
position is considerably higher than India's offer of $4.25 per mBtu at its border with
Pakistan. Though Pakistan has been voicing plans of going it alone in case India decides
to dropout, which may happen if the price issue is not resolved
Iran has rejected India's demand for a price equivalent to international long-term gas-
supply contracts, saying that New Delhi should forget about buying Iranian gas at a low
price (44)
3- The third issue of IPI risk factor for India is sabotage of USA for this project accusing
the Iranian Government is trying to access to the nuclear weapons.4
4- Forth risk of IPI is opting of Pakistani partner in favor of TAP by financial
encouragement of USA which is jeopardizing the IPI pipeline. As result we can say that
India is on the position to change the game as whole by supporting of any of the two
49

44-ibid
Proposed projects to provide the sufficient energy to cater its booming economy at
rational cost and sustainable period.
But , India also can join the both pipe line to have diversify source of supply for her
needs as Monmohan Singh told to the Mr.Sediq, Minister of Mines and industry we need
to 3 or 4 pipe line not just one or two.(45)
Also some experts believe that the IPI pipe line is more in favoure of Pakistan rather than
India due to following reasons:
 Supply period for India fixed at 25 yrs while for Pakistan it’s 30 yrs
 Iran introduced a price revision in Clause 6.3 which India says should be included
“only in case of extreme economic hardship”
 Only the Indian agreement has minimum payment clause in case of failure to take
gas supply
 Shortfalls in supplies, if any, to be compensated by Iran in three years for India
whereas for Pakistan, it’s five years
 While Pak gets 30 days to pay monthly invoices for Iranian gas, India gets a
week.(46)
45-<http// www.dailytimes.com>assessed on August 15, at 12:00 pm
46-<http://www.indianexpress.com/story/227070.html> assessed on Monday, October 15, 2007.at 3:45 pm.
50

Advantages of TAP pipeline for India:
TAP pipeline is more in favors of India in compare of the IPI proposal duet to several
reasons which are:
1- Unlike Iran, which is yet to earmark a dedicated field for feeding the Iran-
Pakistan-India pipeline, Asian development Bank , ADB’s, head of agreements ,
HoA, specifies that Turkmenistan will provide 34.26 trillion cubic feet of gas
from its Daulatabad fields to meet Pakistan’s need of 16.95 TCF, and India and
Afghanistan’s joint demand of 17.31 TCF over 30 years.
2- And by December 31, Turkmenistan will provide the three buyers certification
from an international firm “confirming availability of adequate undedicated gas
reserves in the field,” says the heads of agreements ,HOA,
3- TAPI suits New Delhi better as it provides more gas upfront. While Iran is
offering a flat 30 million standard cubic meters per day throughout the tenure,
TAPI provides India 40 MSCMD during the first four years and 31 MSCMD in
next 26 years when the country’s domestic gas would flow from the Krishna-
Godavari finds.
4- Moreover, the gas quality— except for hydrogen content and calorific value to be
sorted out before the November signing — has been detailed, including the
pressure at delivery. Compare that with Iran-India GSPA on which GAIL (India)
has pointed out that the gas composition differed from that mentioned in the Iran-
Pakistan GSPA
5- The ADB is unambiguous that the GSPA would be for 30 years, followed by
another 20 years for all buyers. As for the GSPA that Iran sent to Pakistan, the
term was 30 years, while the one it sent to India fixed the supply period at 25
years.(47)
51

47- <http://www.indianexpress.com/story/227070.html> assessed on Monday, October 15, 2007.at 3:45
pm.
Russia’s role on TAP pipe line:
TAP pipeline project is depend on the huge reserves of central Asian country which is
under monopoly of Russia’s big energy company, Gasprom, The US government is
interested in opening up Central Asian energy resources to world markets provided it is
done under the leadership of US energy companies. It aims to weaken the Russian
position in Central Asia and put an end to the Russian stranglehold on Central Asian
energy resources. It is interesting to note that Gazprom, the Russian gas giant, has shown
interest in the IPI project with the Gazprom representative in Tehran saying that the
company was keen to participate in the 'peace pipeline.' He noted that Gazprom was one
of the few energy companies in the world that had the necessary experience in building
such pipeline projects and added that the IPI pipeline should carry on to China. Recently
China has been trying to clinch deals with gas-rich Turkmenistan and Uzbekistan to build
a gas pipeline to China, which can again weaken Russian stranglehold on the Central
Asian countries. (47)
Hence, obviously Russia is serious opponent of TAP pipeline which is supposed to
weaken its position over the former territorial sovereignty by American energy
companies. This is also fact that the two giant developing economically countries, India
and China, is seeking to diversify their suppliers to have a good position on bargaining
with their energy providers. The best option for Russia is that to support the IPI project
with hope to extension of that up to china’s border to eliminate the USA backed pipeline,
TAP, Is Russia has such capacity to do does? Is Pakistan would enter at such contract or
opt to TAP in favor of USA?
All and all depends to the shaky diplomacy of the major players of the region.
52

47<http//www.indiapost.com>assessen on Saturday, 08/11/2007 at 12:36am. The writer is with the School
of International Studies, JNU, New Delhi
Main contents:
This project is covered the general economic picture of Afghanistan and its capacity for
further development , feasibility and economic value of each with regards towards the
diversity of social fabric system to eliminate the discrimination and inequality which is
against the fundamental principles of Afghanistan constitution.( article 6) one of the
major project for economic empowerment of the country is the export of Gas & Oil from
the central Asian countries across Afghanistan till dispatch to the consumption market at
South Asian countries. Connectivity of central Asian countries and south Asian countries
up to the European market by Afghanistan as land bridge, location of Afghanistan on the
one of the important geopolitical region need a lot of care of Afghan policy makers to
determine the national interest of a nation as whole to eliminate the jeopardize of public
benefits under influence of the foreign powers. Afghanistan is comparatively small
country which is located among the strong and nuclear power neighbors, China, Pakistan,
and Iran, on the other hand intangible appearance of Russia and availability of military
forces combating the remnants of Taliban group and Al-Qaeda back militias and peace
keeping mission of western countries lead by USA. Therefore, neither isolated
Afghanistan nor the lawlessness and open for any interference of foreigners is useful for
it self and region as well. It’s obvious that without the international assistance progress
and development is just a dream so that, this topic is trying to put the international
community assistant on the best way to grant sustainable development and prevent the
insecurity and injustice.
Conclusion:
Regardless of political viewpoint just mere economic progress of the Country TAP pipe
line is vital and crucial for further social and economic progress of the entire nation. Even
though there are some regional and international conflict over the possibility and
limitation of this project but as far as the national interest of Afghan people is concern
implementation of this project could pave the way for further progress and urge the
foreign investors in Afghanistan as a post –war conflict. Without international assistance
53

betterment of country is just a sweat dream. Reconstruction of European countries after
War World 2nd
can be suitable example for Afghanistan scenario therefore, diversified
and multiethnic country like Afghanistan need lot of care to empower sustainable
economy and stable democracy with especial concentration on equal progress and justice
for all.
54

Chapter VII:
Suggestions & Conclusions
55

Suggestions and conclusion:
Success and failure of any business is most related to the environment analysis, market
opportunity and threat of the launching of any new business. TAP pipe line is one of the
biggest international offers which Afghanistan has been received ever. So that, success
and failure of this project would have the great affect over the future projects. The
strategists and planners of this project must take in to their consideration the social fabric
of Afghan society. The root cause of civil war and conflicts in Afghanistan is related to
the injustice system of the past governments which is acknowledged in the introduction
of Afghan Constitution. Hence, this project and also future projects must provide equal
opportunity for all citizens regardless of their belong ness to different ethnic groups.
This project has two different path ways to cross the Afghanistan till dispatch in Pakistan
territory.
1- Turkmenistan via Heart – kandahar to Pakistan- the shortest way but only benefit
to the small portion of the country by creation of job opportunity and other
revenue .
2- Turkmenistan via north of Afghanistan , samangan, Kabul to Pakistan.- this route
seems to be better suite comparatively with the first option due to location of
Afghanistan Oil& Gas reserves at north which facilitate to transfer that by TAP
pipeline to the center and south of the country and selling the surplus of them to
Pakistan.
According to the contract among the Turkmenistan, Afghanistan and Pakistan after 25 yrs
the pipeline will belong to Afghanistan itself. So, if this pipe line crossing the first
destination after finishing the time frame of the contract this pipeline would be useless.
Therefore, it is obvious that the best route for this project is the one crossing the northern
area of Afghanistan to link that reserves also to the local areas up to the capital city,
Kabul, for domestic consumptions.
56

Limitations:
Limitations of this project were mostly lack of access to the references books and
first hand information due to financial limitation.
1- The government’s websites of Afghanistan is not revealed details of this contract on
their websites.
2- References books which was suitable for the project was not accessible.
3- Interview with the expert and official people was not possible due to long distance.
4- There was not valuable and relevant information on the Afghan General consulate in
Mumbai, India regarding the project.
58

A: reference book
- Research methodology
B: internet sites
1- < http://www.pubquizhelp.34sp.com/geo/landlock.html>
2- < http://www.aisa.org.af/reasons.html>
3- <https://www.cia.gov/library/publications/the-world-factbook/geos/af.html>
4- Ibid
5- <http://www.aisa.org.af>
6- <http://geographic.org >
7- -<http://www.nationsencyclopedia.com/economies/Asia-and-the-
Pacific/Afghanistan-OVERVIEW-OF-ECONOMY.html
8- -<http://www.aisa.org.af
9- -<http:// WWW.AFGHANISTAN.BUSINESS-GATEWAYS.COM
10- Ibid
11- <http:// www.c4ads.org>
12- < http://www.worldbank.com.>
13- < http://media.maps.com/magellan/Images/AFGHAN-W1.gif>
14- <http://news.bbc.co.uk/2/hi/south_asia/country_profiles/1162668.stm>
15- -<http://www.eia.doe.gov/emeu/cabs/afghan.html>
16- -<http://meaindia.nic.in/srec/internalpages/inafgan.pdf>
17- -<http://meaindia.nic.in/srec/internalpages/inafgan.pdf>
19- Ibid
60

20- <http://meaindia.nic.in/srec/internalpages/inafgan.pdf>
21- <http://www.gravmag.com/oil.html >
22- -<http://members.localnet.com/~jeflan/jfafghanpipe.htm>
24- <http://members.localnet.com/~jeflan/jfafghanpipe.htm>
25- <http://www.eia.doe.gov/emeu/cabs/afghan.htm>
26- <http://www.silkroadstudies.org/new/docs/CEF/Quarterly/November_2006/Liao.
pdf
27- <http://socrates.berkeley.edu/~pdscott/q7.html>
28- <http://forums.bharatrakshak.com/viewtopic.php?
t=93&sid=871b15b13bae2bfe433bcb8835803d7e>
29- Ibid
30- < http://news.bbc.co.uk/2/hi/south_asia/2608713>.stm>
31- <http://socrates.berkeley.edu/~pdscott/q3.html>
32- -<http://www.opinion.com.pk/articles/4/Revival-Of-Trans-Afghanistan-Gas-
Pipeline-Project/3>
33- -<http://news.bbc.co.uk/2/hi/business/1984459.stm >
34- -<http://www.cacianalyst.org/files/20050420Analyst.pdf>
35- <http://www.adb.org/Documents/TARs/REG/tar_stu36488.pdf>
36- < http://www.adb.org/Documents/TARs/REG/tar_stu36488.pdf>
37- -<http://www.cacianalyst.org/files/20050420Analyst.pdf>
38- Ibid
39- . <https://www.cia.gov/library/publications/the-world-factbook/geos/tx.html>
40- <http://www.politicalaffairs.net/article/view/3567/1/190>
41- Ibid
42- <http://www.bbc.co.uk/persian/business/story/2007/07/070730_ka-gas-iran-
pakistan-india.shtml>
43- <http:// www.atimes.com>
44- Ibid
45- -<http// www.dailytimes.com>
46- -<http://www.indianexpress.com/story/227070.html>
61

47- <http://www.indianexpress.com/story/227070.html>
62

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