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  • The Oil Game

    U.S.-Azerbaijan Cooperating on Possible Expansion of Trans-Caspian Pipeline

    Shain Abbasov | 21 Aug 2007
    World Politics Review Exclusive

    BAKU, Azerbaijan -- In its latest effort to wean itself from dependence on the Middle East for its energy needs and to counter rival Russia's influence in resource-rich Central Asia, the United States has signed an agreement with Azerbaijan to examine the feasibility of expanding the so-called Trans-Caspian Pipeline project to transport oil and gas from the region.


    The remote and isolated nations of Central Asia are the new playing field in the battle for control of the world's dwindling resources of natural gas and crude oil, and Azerbaijan, wedged between Russia and Iran on the Caspian Sea, is a gateway for Western access to the region's energy.

    The feasibility study, at a cost of $1.7 million to be borne by the U.S. government, would judge the merits of a project to connect Kazakh oil fields to a proposed pipeline beneath the Caspian Sea, while also assessing a possible pipeline that would send additional natural gas to Europe from Central Asia.

    Despite the dismantling of the Soviet Union, Russia continues to loom large over the former Soviet states in Central Asia, mostly asserting dominance in its iron-fisted control of oil and gas through its state-controlled energy firm Gazprom.

    The Trans-Caspian Pipeline construction projects, partnerships involving Azerbaijan, Turkmenistan, Kazakhstan, and both the United States and the European Union, aim to pry Russian fingers off the Caspian's gas and oil taps so that control of the region's reserves will be diversified.

    U.S. Assistant Secretary of State for Economic and Business Affairs Daniel Sullivan traveled this month to Azerbaijan's capital Baku for talks to negotiate the latest feasibility study, which is seen as part of the U.S. strategy to integrate the economies of the resource-rich Central Asia and Caspian countries while also minimizing the influence of China and Russia on their mostly autocratic governments.

    Speaking at the American Education Center in Baku Aug. 16, Sullivan reiterated the long-term U.S. interests in the region, which include democratic reforms, and cooperation on security and in the energy sector.

    "It is time to start a new phase of energy development in the Caspian region," he said.

    The grant will fund feasibility studies on two pipelines across the Caspian Sea. One would deliver oil from Kazakhstan to the Baku-Tbilisi-Ceyhan pipeline, which currently pumps Azerbaijani crude to Turkey. The other would ship gas from Kazakhstan and Turkmenistan across the Caspian to feed the South Caucasus Pipeline, which also connects to Turkey.

    Both could be part of the larger $3 billion, 1,200-mile Trans-Caspian Pipeline project that would carry 16 billion cubic meters of Turkmen and Azeri natural gas to Turkey and 14 billion cubic meters to Europe every year.

    Azerbaijan's state oil company president Rovnag Abdullayev hailed the feasibility study grant as a "further consolidation of regional and international energy security," noting it would also help increase the role and significance of Azerbaijan in European energy security.

    U.S. Trade and Development Agency representative James Wilderotter, signing on behalf of Washington, said the agreement is significant in light of existing projects.

    "We hope to see oil and gas transportation from the East to the West via trans-Caspian pipelines soon," he said.

    After the fall of the Soviet Union, Azerbaijan was the first among the South Caucasus and Central Asian countries to aggressively assert its independence from Russia through control of its natural resources, moving swiftly to sign deals and negotiate favorable tariffs with a range of partners that includes Iran as well as Europe and the United States.

    Among the other regional energy projects on the drawing board is a nearly $7 billion, 2,485-mile Nabucco natural gas pipeline project that has already been endorsed by the energy ministers of Austria, Bulgaria, Hungary, Romania and Turkey, as well as European Union Energy Commissioner Andris Piebalgs.

    Earlier this year, Azerbaijan President Ilham Aliyev sent a loud and clear signal to the Kremlin in protest to high tariffs assessed by Gazprom by canceling a contract to transport oil through a pipeline linking Baku to Novorossiysk in Russia.

    President Aliyev also participated in a high-profile energy summit in Krakow in May, joining his counterparts from Ukraine, Georgia, Lithuania and Poland, as well as a representative from Kazakhstan, in signing a communiqué on energy cooperation.

    "We provide strong political support to this project and would like to play a great role in energy security of Europe," Aliyev said in a very public statement from Krakow, renewing Azerbaijan's readiness to participate in yet another pipeline project, this one to transport crude oil across Ukraine from Odessa, on the Black Sea, to Brody, near the Polish border.

    The summit, held even as Russian Prime Minister Vladimir Putin was on a tour of Central Asia, was loudly condemned in the Russian media as "anti-Russian," though experts suggest that Baku's energy independence has not yet become a serious irritant to Russia.

    "Even with increased volumes of oil and gas, Azerbaijan will not be able to seriously compete with Russia at the European markets," Ilham Shaban, a Baku-based energy expert and the editor of the daily Turan-Energy bulletin, told World Politics Review in an exclusive interview. "Turkmen gas and significant volumes of Kazakh oil are another story. Here Russia will fight till the end."

    Russia might be more worried about Azerbaijan's nascent reconciliation with Turkmenistan, which could lead to a resumption of negotiations over a stalled TCP project that could transport some 32 billion cubic meters of gas annually. The decade-old project, which was intensively lobbied for by the administration of former U.S. President Bill Clinton, had been frozen since 2000 due to a dispute over export quotas.

    Considerable warming of ties between the two countries has come in the aftermath of the death of Turkmen dictator Saparmurad Niyazov earlier this year, with new President Gurbanguly Berdymukhammedov resuming telephone contact with his Azeri counterpart and stating a willingness to reconcile. The thaw was formalized in May in a visit to Ashgabat by Azerbaijan's Foreign Minister Elmar Mammadyarov and symbolized by plans to reopen the Turkmen diplomatic mission in Baku, closed for nearly six years.

    "Azerbaijan itself has enough oil and gas for export over the next decade, and conceivably longer, for significant revenues," noted Shaban. "It would also be lucrative and strategic to become a transit country in the export of Turkmen gas."

    Both Washington and Brussels have moved quickly to capitalize on the change of power in Turkmenistan, hoping to reinforce existing positions in Central Asia and to unlink Europe's resource supplies from the Russian energy monopoly by developing pipelines that bypass Russia to transport Turkmen gas.

    Such moves have been coldly received by Russia, which has moved to consolidate control over reserves in Kazakhstan and Turkmenistan, countries that are less bold in their declarations of independence from the Kremlin. During his Central Asian tour in May, Putin locked in deals with the two governments, effectively blocking the TCP for the time being.

    The United States was quick to downplay any overt signs of hostility in the struggle for control of the Caspian oil basin during the recent negotiations in Baku, but made its intentions clear.

    "Our goal is not confrontation with Russia or Gazprom on the Caspian Sea," one of Sullivan's assistants, Matthew Bryza, told at press conference in Baku.

    "We hope for cooperation and we would like to establish our relationships on the basis of fair competition. The United States is still interested in direct gas supplies from the Caspian region to Europe."

    Still, Baku, Ashgabat and Astana will all be carefully watching the actions of both Moscow and Washington as they weigh the proposals to capitalize on their resource riches, mindful that feasibility studies do not always lead to actual projects.

    Shain Abbasov is a journalist based in Baku.

    World Politics Review | U.S.-Azerbaijan Cooperating on Possible Expansion of Trans-Caspian Pipeline
    An interesting fallout to liberate Europe from the grip of Russian oil and gas.

    While it is heart and hearth warming a news, yet one has to crank in the SCO and its strategy, apart from what Russia has in store.

    Does make the area ideal for some exciting times ahead!


    "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

    I don't have to attend every argument I'm invited to.

    HAKUNA MATATA

  • #2
    Aug. 22, 2007

    Kazakhstan Applies Sakhalin-2 Methods to Kashagan

    Kazakh government vows to halt work at one of the biggest fields of the country developed under PSA – the Kashagan field. The bureaucrats blame violation of environmental laws on investors, including Italian Eni. The analysts speculate that Kazakhstan has become particularly pressurizing in time when it attempts to review the terms of PSA, having actually adopted the tactics successfully tested by Russia at Sakhalin-2 project past year.
    The work in Kashagan field, Kazakhstan’s area of the Caspian Sea, could be terminated on the breach of environmental laws by Italian Eni, Environmental Protection Minister of Kazakhstan Nurlan Iskakov told the cabinet yesterday.

    “We are conducting a scheduled audit and we have all reasons to suppose that the operator doesn’t meet requirements of environmental laws,” Interfax quoted the minister as saying. The content of nitrogen compounds in atmosphere of the Caspian Sea is above the standard, specified Adletbek Bekeev, who is the deputy director at that ministry’s department.

    Kashagan, which recoverable reserves exceed 1 billion tons of crude oil, is developed under PSA. Its operator is Agip KSO, where Eni, Total, ExxonMobil and Shell own 18.52 percent each, ConocoPhillips has 9.26 percent and Kazmunaigaz and Inpex - 8.33 percent each.

    The authorities of Kazakhstan have been long displeased with the project investors. The launch of production from that field was initially slated for 2005, but Agip KSO put it off several times and today’s deadline is 2010. Moreover, Eni has recently announced the increase in the project costs from $57 billion to $136 billion. According to Kazakhstan, this move could be viewed as the changes in the PSA terms, enabling Kazakhstan to widen the share in profit-raising crude from 10 percent to 40 percent. Judging by Russia’s methods tested at Sakhalin-2, violation of environmental laws is the best way to pressurize investors.

    Kommersant - Russia's Daily Online

    Drill Till you Pop!
    What's the actual reason behind this?


    "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

    I don't have to attend every argument I'm invited to.

    HAKUNA MATATA

    Comment


    • #3
      Originally posted by Ray View Post
      What's the actual reason behind this?


      Control.

      Comment


      • #4
        it is all about controlling energy sources and money....isnt it?

        nothing to do with humanism, religions, people, etc....
        Love all, trust a few, do wrong to none; be able for thine enemy rather in power than use; and keep thy friend under thine own life's key; be checked for silence, but never taxed for speech.

        Comment


        • #5
          Money and Strategic power???!

          Domination?????


          "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

          I don't have to attend every argument I'm invited to.

          HAKUNA MATATA

          Comment


          • #6
            Originally posted by Ray View Post
            Money and Strategic power???!

            Domination?????
            If these governments were spending as much time and resources researching for alternative sources of energy, all this jostling would not be necessary and mother earth would be a lot better off.

            Whatever happened to wave power stations ?

            Comment


            • #7
              Wave power stations are noisy, expensive, unstable...illogical for now. How can you heat 6 million city with alternative energy sources?

              Comment


              • #8
                Originally posted by neyzen View Post
                Wave power stations are noisy, expensive, unstable...illogical for now. How can you heat 6 million city with alternative energy sources?
                'Noisy' .... ... ... maybe
                'Expensive' ... ... in the short run
                'Unstable' ... ... ... explain
                'illogical' ... ... ... UK has a working prototype. Now the EU has commited full funding for a fully fledged project, i don't think they have 'illogical' minds.

                Comment


                • #9
                  Originally posted by Zinja View Post
                  Whatever happened to wave power stations ?
                  We're building them. But unlike most of Europe, we've got plenty of coastline.
                  Wave power firm targets NZ | NATIONAL | NEWS | tvnz.co.nz
                  In the realm of spirit, seek clarity; in the material world, seek utility.

                  Leibniz

                  Comment


                  • #10
                    the scientists are saying that known petrol reserves will be end in 50 years...what if that oil ends today???...

                    hımm may i start a new thread about it Pari?
                    Love all, trust a few, do wrong to none; be able for thine enemy rather in power than use; and keep thy friend under thine own life's key; be checked for silence, but never taxed for speech.

                    Comment


                    • #11
                      Originally posted by Big K View Post
                      the scientists are saying that known petrol reserves will be end in 50 years...what if that oil ends today???...

                      hımm may i start a new thread about it Pari?
                      Hey, don't let me stop you
                      In the realm of spirit, seek clarity; in the material world, seek utility.

                      Leibniz

                      Comment


                      • #12
                        Originally posted by Parihaka View Post
                        We're building them. But unlike most of Europe, we've got plenty of coastline.
                        Wave power firm targets NZ | NATIONAL | NEWS | tvnz.co.nz
                        Thanks Parihaka for the link. I knew there was something going on between UK and NZ but didn't think the negotiations were this far. Isn't it interesting that a scottish co is involved. It goes to show just how advanced the research has gone.

                        Comment

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