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RFE/RL: Caspian: Presidents Launch Construction Of Oil Pipelines



Pipeline politics has been a focus of past simulation games in this
course because of the rivalries between Russia, USA, Iran, Turkey etc.
on how to get the oil out of the Caspian area. Here is the project
favored by the US - it now seems to be about to implemented - as have
rival projects, since the political competition between Russia and the
US has lessened in recent years. CH
https://www1.columbia.edu/sec/bboard/gulf2000/gulf2000-12/msg00891.html
Title: RFE/RL: Caspian: Presidents Launch Construction Of Oil Pipelines
Gulf2000 #12 Central Asia Oil/Pipelines/Politics

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Subject: RFE/RL: Caspian: Presidents Launch Construction Of Oil Pipelines
To: gulf2000-12@columbia.edu
From: Laleh Khalili <lk180@columbia.edu>
Date: Thu, 19 Sep 2002 09:53:50 -0400 (EDT)

Sep 18, 2002- RFE/RL: Caspian: Presidents Launch Construction Of Oil
Pipeline
By Michael Lelyveld

Azerbaijan, Georgia, and Turkey are marking the start of the
Baku-Tbilisi-Ceyhan oil-pipeline project today after years of planning and
political controversy. But the westward oil route from the Caspian Sea has
gained commercial support over the years and lost some of the causes of
conflict that made it a major regional issue between Russia and the United
States.

Boston, 18 September 2002 (RFE/RL) -- After eight years of debate, the
presidents of Azerbaijan, Georgia, and Turkey are set to launch
construction of a Caspian pipeline later today, beginning a project that
may tie their countries together for decades to come.

At a ceremony near Baku, Presidents Heidar Aliev, Eduard Shevardnadze, and
Ahmet Necdet Sezer will lay the foundation for the Baku-Tbilisi-Ceyhan oil
pipeline, which has become known as BTC. The 1,760-kilometer link from the
Caspian to the Mediterranean has been a regional goal since Azerbaijan
signed its first offshore contract in September 1994. Energy Secretary
Spencer Abraham will represent the United States, which has been a primary
source of political support.

Aside from the ceremony, the event will mark an enormous commitment to the
Caspian plan. In addition to the $2.9 billion cost for building the
pipeline by 2005, a consortium led by Britain's BP oil company will pledge
investments of $5.2 billion in the next stage of developing Azerbaijan's
resources to fill the line with 1 million barrels of oil per day.

As the first major pipeline in a Western-backed transport corridor through
the Caucasus, the BTC plan has already produced countless arguments and
political calculations. But the benefits for the three countries on the
route have remained largely unchanged.

Azerbaijan's Aliev has promoted the pipeline as a path to independence,
export access, economic growth, and ethnic connection with Turkey. Georgia
has welcomed the development, with the revenues and strategic value of
becoming a crossroads for Western markets. Turkey has also been eager to
serve as a Caspian gateway, while avoiding an increase of oil traffic
through the Bosporus.

Speaking yesterday at a meeting with Sezer in Baku, Aliev said the
pipeline would play a key role in the construction of a regional security
system, Interfax reported. Actual trench work for the pipeline is expected
to begin next March.

Although the countries continue to see the same benefits, many
circumstances surrounding the pipeline have changed. For years, BTC was
viewed as a political project because of the U.S. goal of avoiding Iran
and assuring that Caspian exports would have an alternative to Russian
routes. But politics seemed to fade as a prime motivator after 1999, when
Britain's BP oil company decided to back BTC. Since then, business
concerns have been driving the plan. Some analysts have also changed their
minds about the project's potential over the years.

In an interview with RFE/RL, Fiona Hill, a fellow in foreign-policy
studies at the Brookings Institution in Washington, said, "I was pretty
skeptical about this at first." But she added, "Finally, it does seem that
BP has decided it is commercially viable."

As the head of the nine-member BTC consortium, BP has given assurances to
investors that Azerbaijan will have enough oil for the pipeline, even if
it fails to attract Caspian exports from Kazakhstan. The second phase of
Azerbaijan's offshore project is expected to yield 1.6 billion barrels of
oil, a BP official said last week.

Years ago, the competition of routes through Russia and Iran dominated the
debate over BTC. But Hill said there has been "no appreciable progress" in
relations with Iran to cause rethinking of the BTC plan. Closer ties with
Russia also seem to have made the project a less contentious issue.

Hill noted that Moscow has improved its relations with both Azerbaijan and
Turkey, ending the friction over their national aspirations for BTC. Only
the recent disputes with Georgia over alleged Chechen operations on its
territory remain a source of concern. Although no Russian companies have
joined the BTC consortium, statements from Moscow suggest that the project
has been gradually accepted as fact. Russia's LUKoil has also said that it
plans to ship oil through the line.

This week, the Reuters news agency quoted Russian Deputy Foreign Minister
Viktor Kalyuzhnyi as saying, "Baku-Ceyhan is our direct competitor, but
there is nothing to be afraid of." Kalyuzhnyi added that the outlet might
even provide healthy competition for the Russian state pipeline company
Transneft, saying, "I think it is even positive, because it can shake up
Transneft's officials, who have become too used to be monopolists."

The comment is a far cry from statements in September 1994, when Moscow
refused to recognize Azerbaijan's contract with the consortium of Western
oil companies and called it illegal.

BTC no longer seems to be a hot topic of opposition in Russia. Hill said,
"From the Russian point of view, I think it has kind of faded into the
background." One reason may be President Vladimir Putin's decision to
welcome a cooperative U.S. presence in the region since the terrorist
attacks of 11 September 2001, making BTC a more minor matter between the
two countries.

The political context for BTC may also have shifted with the growing
cooperation between Russia and the United States on energy. During a
speech in Washington last week, U.S. Senator Conrad Burns (Republican,
Montana) promoted the idea of relying on both Russia and the Caspian for
energy resources instead of the Middle East.

Burns said, "Russia and the Caspian states present the biggest opportunity
in oil exploration and production for America," the London-based
"Financial Times" reported. He added that the new trust between Putin and
U.S. President George W. Bush "affords America a historic opportunity to
share new technologies and modern management with our Russian ally."

The speech, reportedly written in consultation with the Bush
administration, suggests that significant changes have taken place in the
years since the BTC pipeline was first planned. It may still be too soon
to conclude that Russia and the United States will extend their
cooperation to the Caspian, but some of the causes of controversy over the
pipeline seem to have eased.




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