Pipeline Dreams:
One of the factors which led to throwing Ms Benazir Bhutto out of Power
‘The Herald’ – June 1997
The two-years battle between US oil company Unocal and Argentinean firm Bridas to build an oil and gas pipeline from Turkmenistan, across war-torn Afghanistan and through to Pakistan has intensified after the Nawaz Sharif government signed an agreement with Turkmenistan and Unocal at the Economic Co-ordination Organization (ECO) in Ashkhabad on May 14. Bridas has the clear support of the Taliban who have promised to give Bridas permission to build the pipeline, while Unocal appear to have secured Turkmenistan and Pakistan’s support.
Nagging question behind this deal is why Pakistan has sided with one consortium rather than the other. Since 1995, both the Bhutto government and the military did not commit to one oil company. Pakistan’s earlier position was that it would allow both companies to compete and then co-operate with the one that built the pipeline first. But the reality is that the US State Department is heavily backing Unocal, and Turkmenistan is desperately keen to garner US support for its oil and gas exports. Bridas’ problems with Unocal in Turkmenistan are generally placed at the door of a US desire to monopolise Turkmenistan’s energy. So the reason why Pakistan now seems to favour one company over the other is that the Sharif government appears to have bent to US pressure.
The protocol signed by Pakistan is deeply flawed. It makes no mention of the Afghan warlords through whose territory the pipeline would pass and does not involve the Taliban in any decision making in the future. The Taliban are expected to react angrily to this development.
The Sharif government is banking on the ISI making sure that the Taliban dump Bridas and go long with whatever Pakistan wants, a senior bureaucrat in Islamabad explains. But that will not be so easy.
History of Bridas and Unocal’s competition in the region is age old. However US interest in laying pipeline through Unocal, was established in April 1995, when Turkmenistan President Niyazov signed our government with Unocal (a 12th largest oil company in the US) and its partner, the Saudi Arabian owned Delta Oil Company to behind a gas pipeline extending from Daulatabad Gas Fields to Multan.
Unocal later signed an even more ambitious agreement for laying an oil pipeline from Chardzhou in Turkmenistan through Afghanistan to an oil terminal on Pakistan’s coast delivering 1 million barrels per day.
Bridas also offered to build an oil pipeline but it suffered a setback when President Niyazov banned Bridas oil exports and shutting down its other operations in December 95. Bridas moved the courts and claimed 15 billion US dollars in damages.
Meanwhile, US pressure on Pakistan increased. During two trips to Pakistan and Afghanistan in April and August 1996, US Assistant Secretary of State Robin Raphael frequently lobbied for the Unocal pipeline, according to Pakistani and Afghan diplomats. In August, Raphael also visited Central Asian capitals and Moscow. “We have an American company which is interested in building a pipeline from Turkmenistan through to Pakistan,” Raphael said at a press conference in Islamabad on April 21, 1996. “This pipeline project will be very good for Turkmenistan, for Pakistan and for Afghanistan.”
Earlier, in March 1996 another senior US diplomat had a major row with Bhutto when he lobbied for Unocal. “He accused Bhutto of ‘extortion’ when she defended Bridas, and Bhutto as furious,” says a senior Bhutto aide who was present at the meeting. “She demanded a written apology from the diplomat which she got,” says another aide. But in Ashkhabad, the Americans achieved their objective. In October, Niyazov gave Unocal-Delta exclusive rights to build the pipeline.
With all the odds stacked heavily against it, Bridas then moved to engage the support of the Taliban. On May 4 in Kabul, Bridas and the Taliban declared that by the end of the month they would sign an agreement to build the pipeline.
Pakistan’s agreement endorsement of US oil company Unocal’s proposal to build pipelines from Central Asia may bring Islamabad into conflict with the Taliban, who recently cut a deal with a rival company, Bridas.
The reader may now understand the US interest in the laying of pipeline and pressures it applied on Benazir Bhutto’s government to grant contractors to a company of its own choosing when she did not succumb to pressures this pipeline turned out to be one of the factors of Benazir Bhutto’s downfall.