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Israeli firm brokers Caspian gas deal
Merhav go-between for GE and Bechtel

By David Makovsky
Ha'aretz Diplomatic Correspondent, Israel
February 21, 1999

In a deal brokered by Herzliya-based firm Merhav, giant U.S. firms General Electric and Bechtel signed a memorandum of understanding in Turkmenistan on Friday, affirming their intentions to build a $2.5 billion natural-gas pipeline from Turkmenistan to Turkey, bypassing Iran by crossing the Caspian Sea.

Merhav President Yossi Meiman said that he expects other companies from the U.S., Europe and Japan to join the consortium led by GE and Bechtel. Meiman also said he expects Israeli engineering firms to be among those constructing the pipeline, just as they have been involved in other Merhav projects in Turkmenistan.

Turkmenistan President Suaparmurat Nizarov, who is advised by Merhav, last week awarded GE and Bechtel the lead role in constructing the gas pipeline, which would be capable of carrying 30 billion cubic meters of gas over 2,000 kilometers (1,200 miles).

The pipeline, expected to be constructed over a three-year-period, will start in the east of Turkmenistan, cross the Caspian seabed and then pass through Azerbaijan and Georgia on its way to Turkey and, subsequently, to other European markets.

On Wednesday, Azeri President Haydar Aliyev gave his blessing to the project, allowing the pipeline to cross Azerbaijan.

The memorandum of understanding for a trans-Caspian pipeline is a key step toward a deal which, assuming it is finalized, would have far-reaching political significance as the first part of a U.S.-backed effort to ensure that Caspian oil is not controlled by Iran.

The Clinton Administration dispatched Richard Morningstar, its Caspian oil coordinator, to attend the signing. As well, the U.S. government's Export-Import Bank is expected to help finance a third of the project.

The Clinton Administration does not want important gas or oil pipelines to go through Iran, fearing that the pipelines' presence could increase the country's international political leverage.

Oil company Royal Dutch Shell studied the feasibility of routing the pipeline through Iran and found the route would cost considerably more, placing the project's total price tag somewhere between $3.8 billion and $4 billion.

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