ISLAMABAD, Oct 12: US-based energy firms through Overseas Private Investment Corporation (OPIC) are likely to reactivate over $2 billion investment in Turkmenistan to Pakistan gas pipeline project.

Informed sources in the energy sector said that Pakistan and the US have started initial consultations to materialize benefits of removal of economic sanctions on Pakistan that allowed OPIC and US Exim Bank to finance private sector projects.

These sources said that UNOCAL, the US energy firm that led a consortium to construct Pak-Turkmen pipeline in 1997 but later pulled out of the project because of continued fighting in the war- torn Afghanistan, is likely to come forward once again along with a couple of other US firms once peace returned to Afghanistan.

Petroleum Minister Usman Aminuddin and US ambassador Wendy Chamberlin discussed at length the Pak-Turkmen Pipeline at a meeting last week. An official statement said that proposed Turkmenistan-Afghanistan-Pakistan gas pipeline “opens up new avenues of multi-dimensional regional cooperation particularly in view of the recent geo-political developments in the region”.

Many officials were, however, of the belief that the project was “a far-fetched dream” particularly in the background of new round of war whose outcome was unclear.

Jehangir Bashar, spokesman and senior joint secretary petroleum told Dawn that petroleum minister and the US ambassador discussed in detail the Pak-Turkmen project but “no decision could be taken” because the project is subject to situation in Afghanistan.

He said that it was “premature” whether UNOCAL or any other US company would join the consortium to build the pipeline, but “it would be another viable option if situation in Afghanistan is conducive”.

The move has, however, activated other competitors particularly the Sharjah-based Crescent Petroleum to pursue draft head of terms agreement it had submitted to Pakistan’s petroleum ministry three months back.

Senior officials of Crescent travelled all the way from Sharjah last week to hold talks with petroleum ministry officials on the subject. Pakistan has not yet responded on the draft agreement.

Mr Bashar said that the draft head of terms agreement submitted by Crescent Petroleum was still under consideration, and no response has been given to them.

He said there was no progress on Pak-Iran gas pipeline project for a long time since onshore and offshore feasibility studies were ordered for execution.

Under removal of sanctions by the United States, both OPIC and EXIM Bank were allowed to finance private sector projects in Pakistan.

Oil and gas, textile and information technology sectors could benefit as federal ministers of these three sectors during their respective visits to the US in the recent months got very encouraging response from the business community - both US- Pakistanis and US companies - for investments here but expressed their inability to raise finances due to restrictions.

UNOCAL pulled out of the CENTGAS consortium in December 1998 quoting “sharply deteriorating political conditions in the region” did not allow to construct 1,464 km-long pipeline from Daulatabad gas field in Turkmenistan to Multan in Pakistan.

The memorandum of understanding (MOU) between Pakistan and CENTGAS envisaged delivery of 1500 mmcfd of gas in Multan at a rate of 75 per cent of the border price of fuel oil but not less than $1.65 per mmbtu and not more than $2.05 per mmbtu.

The CENTGAS consortium comprised UNOCAL (36.5 per cent), Delta Oil of Saudi Arabia (15 per cent), Turkmen government (7 per cent), Japanese owned Indonesia Petroleum (6.5 per cent), Itochu Oil Exploration Co (6.5 per cent), South Korea’s Hyundai Engineering (6.5 per cent) and Pakistan’s Crescent Group (3.5 per cent). Russian Gazprom was also supposed to have 10 per cent shares in the consortium.

The Overseas Private Investment Corporation provides political risk insurance and loans help to US businesses of all size to invest and compete in more than 140 emerging markets and developing nations worldwide if it is in America’s own economic and strategic interest, these sources said. By charging user- fees, OPIC operates at no net cost to US taxpayers and its reserves currently exceed $4 billion.