#5486
[Second Issue of the Day]
#6
ANALYSIS-Prolonged Afghan conflict could hurt Caspian
oil
By Samantha Shields
ALMATY, Oct 10 (Reuters) - A speedy resolution of the Afghan problem will be
a key step to unlocking the oil and gas riches of the Caspian Sea but any
spread of the unrest could jeopardise some existing projects, analysts said
on Wednesday.
U.S.-British forces have in recent days launched strikes against Afghanistan
for sheltering those allegedly responsible for the September 11 attacks, and
the country, while not an oil producer itself, is close to the energy-rich
Caspian basin.
While oil majors which have invested billions of dollars in the Caspian area
have pledged to continue their involvement, security concerns on a prolonged
Afghan conflict may consign Central Asia to the limbo it has occupied since
Britain and Russia fought over it in the 19th century.
"If there's a reasonably clean outcome, then Caspian oil will be at a
premium...If there's a messy outcome there will be fear of contagion," said
Eric Kraus, chief strategist at Nikoil brokerage.
The Caspian touches the shores of five countries -- Russia, Iran, Kazakhstan,
Azerbaijan and Turkmenistan.
Turkmenistan shares a border with Afghanistan while Kazakhstan borders
Turkmenistan and other Afghan neighbours Uzbekistan and Tajikistan.
Caspian oil and gas reserves, the majority of which are controlled by
Kazakhstan, Turkmenistan and Azerbaijan, have never really been exploited to
the full partly because the region is distant from major dollar-paying
markets.
Now, a decade after substantial foreign interest and investment have put
pipeline projects on the board, security concerns could affect some or all of
them.
CASPIAN SOLUTION TO BE POSTPONED
"Widespread military operations in the region will definitely put
pipeline
projects on hold," said Sergei Glaser, an analyst with Alfa Bank in London.
Moreover, the countries which appeared after the Soviet Union's collapse are
still bickering with Russia and Iran on who owns what in the land-locked sea.
No pipeline deals are possible without a clear-cut deal on this and such an
accord will be further put off by the conflict.
"The situation is really very unstable and volatile, nobody in any
sector can
make long-term or even medium-term plans," Glaser said.
While most of Kazakhstan's onshore oil is far from any trouble spots,
infrastructure constraints will limit any benefits it could derive from
additional exports even if prices rise on the back of supply concerns and
OPEC action.
Russia and its Central Asian neighbours have always been jittery about
Afghanistan, fearing an influx of fundamentalist fighters from across the
border but the issue has not so far deterred investments into the main oil
producing areas.
The major problem Caspian states face is how to get their oil from fields to
markets. The only completely new oil pipeline from the Caspian to
international markets runs from Kazakhstan's huge Tengiz field to Russia's
Novorossiisk port.
Iran had been bidding to see oil move across its territory and a $3 billion
U.S.-backed pipe from Azeri capital Baku to the Turkish port of Ceyhan has
been gaining support.
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