Rosneft, Itera Move on Afghan Oil, Gas

Russian energy companies have agreed to help rebuild Afghanistan's devastated oil and gas industries in hopes of securing lucrative government contracts as well as a strategic hold on the region.

State-owned oil company Rosneft, gas trader Itera and Afghanistan's ministry of mining and industry signed in Kabul on Wednesday a protocol of intentions, under which Russian specialists are to deliver a feasibility study outlining the prospects of energy sector reconstruction.

Rosneft and Itera representatives had been negotiating with Afghan officials since the beginning of the week. Neither company was able to estimate the cost of such a project, although the Russian side has agreed to finance it.

"It is assumed this will give Russia an edge once the actual doling out of contracts begins," said a source close to the negotiations in explaining what Russia has to gain from such a deal.

As the authorized representative of the Russian government, Rosneft may be offered the chance to participate in tenders for oil production licenses alongside other energy companies, said a press release issued by Rosneft on Thursday.

Afghanistan's oil and gas sector was given a boost in the 1960s and 1970s when Soviet experts helped discover the country's first oil and gas deposits. Rosneft values already-discovered hydrocarbon reserves at $22 billion.

During the 1980s, 90 percent of Afghanistan's natural gas was pumped through the Soviet Union's pipeline system. Neither gas nor oil has been exported in the last eight years.

A flurry of possible energy projects have invaded the country ever since U.S.-led forces ousted the Taliban government.

The most prominent of these projects is a plan for a $2 billion gas pipeline, which was originally proposed by Unocal in the 1990s but later abandoned due to fierce fighting between the Taliban and the opposition Northern Alliance.

Turkmen President Saparmurat Niyazov has been the main driving force behind the revival of the pipeline, which would stretch 1,400 kilometers from the Daulatabad reservoirs to Multan in Pakistan. With only an outlet to the landlocked Caspian, Turkmenistan -- which has the world's fifth-largest natural gas reserves -- is forced to transport its gas through Russia.

A pipeline through Afghanistan could change all that. Turkmenistan, Pakistan and Afghanistan earlier this year chose the Asian Development Bank to be the lead financier for the project. Feasibility studies are scheduled to be completed next March.

Last month, Niyazov invited Rosneft and Itera to participate in the construction of the pipeline. Both companies said pipeline plans were under consideration, but declined to say whether it was discussed during the week's negotiations.