Afghanistan's energy war
By Shukria Dellawar and Antonia Juhasz
Violence escalated daily in Afghanistan with the approach of the 10-year
anniversary of the United States 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 US 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 with 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 with 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% 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 non-profit 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". 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 US companies to do
business there, so negotiations stalled until 2001, when sanctions were lifted.
The George W Bush administration made completion of the TAPI a core part of its
Afghanistan war strategy. As then-US 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, US 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 while in India urged completion of the TAPI.
In April, upon the Afghan parliament's approval of a TAPI gas pricing
agreement, parliamentarian Mohammad Anwar Akbari said that "we will have
support of a US 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 US 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.
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