[Peace-discuss] FW: Kicking Ass in Afghanistan (fwd)

[Dlind49 at aol.com]

not just kick  some ass but to overthrow taliban so UNICOL could build oil 
pipeline:


U.S. INTERESTS IN THE CENTRAL ASIAN REPUBLICS HEARING BEFORE THE SUBCOMMITTEE 
ON ASIA AND THE PACIFIC OF THE COMMITTEE ON INTERNATIONAL RELATIONS HOUSE OF 
REPRESENTATIVES 
  
ONE HUNDRED FIFTH CONGRESS SECOND SESSION 
FEBRUARY 12, 1998
  
  
Next we would like to hear from Mr. John J. Maresca, vice president of 
international relations, Unocal Corporation. You may proceed as you wish. 
  
STATEMENT OF JOHN J. MARESCA, VICE PRESIDENT OF INTERNATIONAL RELATIONS, 
UNOCAL CORPORATION
  
Mr. Maresca. Thank you, Mr. Chairman. It's nice to see you again. I am John 
Maresca, vice president for international relations of the Unocal Corporation. 
Unocal, as you know, is one of the world's leading energy resource and project 
development companies. I appreciate your invitation to speak here today. I 
believe these hearings are important and timely. I congratulate you for focusing 
on Central Asia oil and gas reserves and the role they play in shaping U.S. 
policy. 
  
I would like to focus today on three issues. First, the need for multiple 
pipeline routes for Central Asian oil and gas resources. Second, the need for 
U.S. support for international and regional efforts to achieve balanced and 
lasting political settlements to the conflicts in the region, including 
Afghanistan. Third, the need for structured assistance to encourage economic reforms and 
the development of appropriate investment climates in the region. In this 
regard, we specifically support repeal or removal of section 907 of the Freedom 
Support Act. 
  
Mr. Chairman, the Caspian region contains tremendous untapped hydrocarbon 
reserves. Just to give an idea of the scale, proven natural gas reserves equal 
more than 236 trillion cubic feet. The region's total oil reserves may well 
reach more than 60 billion barrels of oil. Some estimates are as high as 200 
billion barrels. In 1995, the region was producing only 870,000 barrels per day. By 
2010, western companies could increase production to about 4.5 million 
barrels a day, an increase of more than 500 percent in only 15 years. If this 
occurs, the region would represent about 5 percent of the world's total oil 
production. 
  
One major problem has yet to be resolved: how to get the region's vast energy 
resources to the markets where they are needed. Central Asia is isolated. 
Their natural resources are landlocked, both geographically and politically. Each 
of the countries in the Caucasus and Central Asia faces difficult political 
challenges. Some have unsettled wars or latent conflicts. Others have evolving 
systems where the laws and even the courts are dynamic and changing. In 
addition, a chief technical obstacle which we in the industry face in transporting 
oil is the region's existing pipeline infrastructure. 
  
Because the region's pipelines were constructed during the Moscow-centered 
Soviet period, they tend to head north and west toward Russia. There are no 
connections to the south and east. But Russia is currently unlikely to absorb 
large new quantities of foreign oil. It's unlikely to be a significant market for 
new energy in the next decade. It lacks the capacity to deliver it to other 
markets. 
  
Two major infrastructure projects are seeking to meet the need for additional 
export capacity. One, under the aegis of the Caspian Pipeline Consortium, 
plans to build a pipeline west from the northern Caspian to the Russian Black Sea 
port of Novorossiysk. Oil would then go by tanker through the Bosporus to the 
Mediterranean and world markets. 
  
The other project is sponsored by the Azerbaijan International Operating 
Company, a consortium of 11 foreign oil companies, including four American 
companies, Unocal, Amoco, Exxon and Pennzoil. This consortium conceives of two 
possible routes, one line would angle north and cross the north Caucasus to 
Novorossiysk. The other route would cross Georgia to a shipping terminal on the Black 
Sea. This second route could be extended west and south across Turkey to the 
Mediterranean port of Ceyhan. 
  
But even if both pipelines were built, they would not have enough total 
capacity to transport all the oil expected to flow from the region in the future. 
Nor would they have the capability to move it to the right markets. Other 
export pipelines must be built. 
  
At Unocal, we believe that the central factor in planning these pipelines 
should be the location of the future energy markets that are most likely to need 
these new supplies. Western Europe, Central and Eastern Europe, and the Newly 
Independent States of the former Soviet Union are all slow growth markets 
where demand will grow at only a half a percent to perhaps 1.2 percent per year 
during the period 1995 to 2010. 
  
Asia is a different story all together. It will have a rapidly increasing 
energy consumption need. Prior to the recent turbulence in the Asian Pacific 
economies, we at Unocal anticipated that this region's demand for oil would almost 
double by 2010. Although the short-term increase in demand will probably not 
meet these expectations, we stand behind our long-term estimates. 
  
I should note that it is in everyone's interest that there be adequate 
supplies for Asia's increasing energy requirements. If Asia's energy needs are not 
satisfied, they will simply put pressure on all world markets, driving prices 
upwards everywhere. 
  
The key question then is how the energy resources of Central Asia can be made 
available to nearby Asian markets. There are two possible solutions, with 
several variations. One option is to go east across China, but this would mean 
constructing a pipeline of more than 3,000 k ilometers just to reach Central 
China. In addition, there would have to be a 2,000-kilometer connection to reach 
the main population centers along the coast. The question then is what will be 
the cost of transporting oil through this pipeline, and what would be the 
netback which the producers would receive. 
  
For those who are not familiar with the terminology, the netback is the price 
which the producer receives for his oil or gas at the wellhead after all the 
transportation costs have been deducted. So it's the price he receives for the 
oil he produces at the wellhead. 
  
The second option is to build a pipeline south from Central Asia to the 
Indian Ocean. One obvious route south would cross Iran, but this is foreclosed for 
American companies because of U.S. sanctions legislation. The only other 
possible route is across Afghanistan, which has of course its own unique 
challenges. The country has been involved in bitter warfare for almost two decades, and 
is still divided by civil war. From the outset, we have made it clear that 
construction of the pipeline we have proposed across Afghanistan could not begin 
until a recognized government is in place that has the confidence of 
governments, lenders, and our company. 
  
Mr. Chairman, as you know, we have worked very closely with the University of 
Nebraska at Omaha in developing a training program for Afghanistan which will 
be open to both men and women, and which will operate in both parts of the 
country, the north and south. 
  
Unocal foresees a pipeline which would become part of a regional system that 
will gather oil from existing pipeline infrastructure in Turkmenistan, 
Uzbekistan, Kazakhstan and Russia. The 1,040-mile long oil pipeline would extend 
south through Afghanistan to an export terminal that would be constructed on the 
Pakistan coast. This 42-inch diameter pipeline will have a shipping capacity of 
one million barrels of oil per day. The estimated cost of the project, which 
is similar in scope to the trans-Alaska pipeline, is about $2.5 billion. 
  
Given the plentiful natural gas supplies of Central Asia, our aim is to link 
gas resources with the nearest viable markets. This is basic for the 
commercial viability of any gas project. But these projects also face geopolitical 
challenges. Unocal and the Turkish company Koc Holding are interested in bringing 
competitive gas supplies to Turkey. The proposed Eurasia natural gas pipeline 
would transport gas from Turkmenistan directly across the Caspian Sea through 
Azerbaijan and Georgia to Turkey. Of course the demarcation of the Caspian 
remains an issue. 
  
Last October, the Central Asia Gas Pipeline Consortium, called CentGas, in 
which Unocal holds an interest, was formed to develop a gas pipeline which will 
link Turkmenistan's vast Dauletabad gas field with markets in Pakistan and 
possibly India. The proposed 790-mile pipeline will open up new markets for this 
gas, traveling from Turkmenistan through Afghanistan to Multan in Pakistan. 
The proposed extension would move gas on to New Delhi, where it would connect 
with an existing pipeline. As with the proposed Central Asia oil pipeline, 
CentGas can not begin construction until an internationally recognized Afghanistan 
Government is in place. 
  
The Central Asia and Caspian region is blessed with abundant oil and gas that 
can enhance the lives of the region's residents, and provide energy for 
growth in both Europe and Asia. The impact of these resources on U.S. commercial 
interests and U.S. foreign policy is also significant. Without peaceful 
settlement of the conflicts in the region, cross-border oil and gas pipelines are not 
likely to be built. We urge the Administration and the Congress to give strong 
support to the U.N.-led peace process in Afghanistan. The U.S. Government 
should use its influence to help find solutions to all of the region's conflicts. 
  
U.S. assistance in developing these new economies will be crucial to business 
success. We thus also encourage strong technical assistance programs 
throughout the region. Specifically, we urge repeal or removal of section 907 of the 
Freedom Support Act. This section unfairly restricts U.S. Government assistance 
to the government of Azerbaijan and limits U.S. influence in the region. 
  
Developing cost-effective export routes for Central Asian resources is a 
formidable task, but not an impossible one. Unocal and other American companies 
like it are fully prepared to undertake the job and to make Central Asia once 
again into the crossroads it has been in the past. Thank you, Mr. Chairman. 
  
[The prepared statement of Mr. Maresca appears in the appendix.]