Afghanistan's Energy War

By Shukria Dellawar and Antonia Juhasz

Foreign Policy in Focus
October 5, 2011

submitted to Portside by the author

http://www.fpif.org/articles/afghanistans_energy_war

[Moderator's note: Tomorrow is the 10-year-anniversary of
the U.S. invasion of Afghanistan.]


Violence escalated daily in Afghanistan with the approach of
the 10-year anniversary of the U.S. invasion on October 7.
At the same time, a little-noted energy agenda is moving
rapidly forward that may not only deny Afghans the much
needed economic benefits their energy resources could
provide, but may also exacerbate insecurity and instability,
ensuring a prolonged U.S. and foreign military presence. It
is an agenda remarkably similar to one well underway in
Iraq.

Eight years of war in Iraq succeeded in transforming the
country's oil industry from a nationalized model, largely
closed to American oil companies, into an all but privatized
industry open to foreign oil companies. ExxonMobil and BP,
among other companies, are today producing oil in Iraq for
the first time in over 30 years under some of the most
corporate-friendly terms in the world. However, opposition
from Kurdish leaders, Iraqi unions, civil society
organizations, and some parliamentarians - who worry that
the terms would grant undue benefit to foreign companies, to
the detriment of Iraq's economic stability and security -
has kept the Iraq Oil and Gas Law, written to lock in this
access, from passage.

But while the effort to transform Iraq's oil sector has
played out on a fairly public international stage, no such
attention has been focused on Afghanistan. Compared to Iraq,
Afghanistan's populace remains poorly educated, its civil
society and public sector workforce underdeveloped, and its
government not only weak and challenged by corruption, but
also lacking in both energy sector expertise and
infrastructure. Under such circumstances, a radical redesign
of the nation's energy development model cannot take place
in a manner that ensures fairness, equity, sustainability,
or safety.

Suspect Intentions

Afghanistan's known hydrocarbons are primarily located in
the North. Its approximately 1.6 billion barrels of crude
oil and 15.7 billion cubic feet of natural gas are minor in
comparison to the resources of its neighbors (Iraq's oil
reserves are estimated at 115 billion barrels), but are
comparable to those in nations such as Chad and Equatorial
Guinea -and may be considerably larger, as there has been no
significant exploration in decades.

Unknown to most Afghans, in January 2009 the government
implemented a new Hydrocarbon Law that transforms its oil
and natural gas sectors from fully state-owned to all but
fully privatized. In April 2011, the Afghanistan Ministry of
Mines launched the first of what it expects to be "several
tenders for Afghanistan's oil and gas resources over the
next few years."

As in Iraq, the contracts include production-sharing
agreements. These agreements are the oil industry's
preferred model, but are roundly rejected by all the top
oil-producing countries in the Middle East because they
grant extremely long-term contracts (45 years or more,
including the exploration phase, under Afghanistan's law)
and greater control, ownership, and profits to the companies
than other models. They are used for only approximately 12
percent of the world's oil. The Afghanistan contracts,
moreover, would not require foreign companies to invest
earnings in the Afghan economy, partner with Afghan
companies, or share new technologies.

The Kabul-based nonprofit watchdog, Integrity Watch
Afghanistan, found the Ministry of Mines severely lacking in
the capacity to implement sound oversight, including to
protect impacted communities and the environment, and found
that this, "combined with reported endemic corruption in
Afghanistan," means that the Afghan government will not be
able to ensure the good management of these resources.

The Norwegian government recently concluded an analysis of
Afghanistan's hydrocarbons, finding that "most Afghans
express a high level of suspicion about the motives and
intentions of neighboring countries and, increasingly, also
of the international community. Further, "[M]any Afghans
point out the risk of a lack of political willingness to
ensure that such benefits [from hydrocarbon development]
will have a fair distribution."

Pipeline Politics

Afghanistan is not only an energy producer, it is also a
potential "energy conveyer." And negotiations for the
creation of a Turkmenistan-Afghanistan-Pakistan-India (TAPI)
pipeline are progressing at a rapid rate. Just last month,
Afghanistan Minister of Mines Wahidullah Shahrani reported,
"The implementation of the TAPI project will begin in 2012
and will be completed in 2014."

The pipeline would carry natural gas from Turkmenistan
through Afghanistan and Pakistan to India. It has been an
objective of United States and western energy companies (and
their governments) that have invested in the land-locked but
energy-rich countries of the Caspian region since the
mid-1990s, when companies including California-based Unocal
began negotiating with the Taliban. Sanctions imposed on
Afghanistan in 1998 made it impossible for U.S. companies to
do business there, so negotiations stalled until 2001, when
sanctions were lifted.

The Bush administration made completion of the TAPI a core
part of its Afghanistan war strategy. As then-U.S. Assistant
Secretary of State Richard Boucher said in 2007: "One of our
goals is to stabilize Afghanistan, so it can become a
conduit and a hub between South and Central Asia so that
energy can flow to the south."

This March, U.S. Assistant Secretary of State Robert Blake,
Jr. reiterated the importance of the TAPI before a
Congressional Committee, and in July Secretary of State
Hillary Clinton urged completion of the TAPI while in India.

In April, upon the Afghanistan Parliament's approval of a
TAPI gas pricing agreement, parliamentarian Mohammad Anwar
Akbari said that "we will have support of a U.S. company"
for its construction. In the past year, Minister of Mines
Shahrani has been pushing the benefits of both the pipeline
and natural resource development in Afghanistan to private
companies in London and New York.

The Price for Entry

The primary obstacle to construction of the pipeline and to
foreign oil companies actively seeking oil production
contracts is, and always has been, security. In response,
Minister Shahrani announced plans for a 7,000-person Afghan
"pipeline security force." Yet across Afghanistan there is
enormous skepticism about the present capacity of the Afghan
National Army and Police, who are considered no match for
the Taliban or local warlords.

Yet, if the pipeline is constructed and U.S. companies begin
producing in Afghanistan, its importance to the West will
only intensify, as will the desire to keep Afghanistan "open
for business." If Afghanistan does not have the internal
capacity to provide this "openness" itself, the Untied
States and other foreign governments may feel forced to do
so on its behalf - utilizing their own troops.

The focus on Afghanistan's entry into the "Great Game" of
energy politics must not be only on generating profits or
for the interests of external actors, but also on the long-
term stability, independence, and strength of Afghanistan.
Otherwise, the price for entry may be far higher than
Afghans - and Americans - wish to pay.

[Antonia Juhasz is an oil industry analyst and author of The
Tyranny of Oil: the World's Most Powerful Industry--and What
We Must Do To Stop It. She is an Associate Fellow with the
Institute for Policy Studies and a National Advisory
Committee member of Iraq Veterans Against the War. Shukria
Dellawar, an Afghan American, is an independent researcher
and Afghanistan security specialist. Both women were in
Afghanistan in August as part of a fact-finding mission.]

___________________________________________

Portside aims to provide material of interest to people
on the left that will help them to interpret the world
and to change it.

Submit via email: [log in to unmask]

Submit via the Web: http://portside.org/submittous3

Frequently asked questions: http://portside.org/faq

Sub/Unsub: http://portside.org/subscribe-and-unsubscribe

Search Portside archives: http://portside.org/archive

Contribute to Portside: https://portside.org/donate