From the hyperlink referred to in my message #14848:
Jamestown, January 12, 1996
THE POLITICS OF CASPIAN OIL
by Rossen Vassilev
Moscow and Washington are increasingly drawn into a rivalry over the oil wealth of the Caspian Sea, comparable to the Great Game struggle in the 19th century between Russia and Britain for influence in Central Asia. Since the breakup of the USSR in December 1991, Russia, Turkey, and Iran, the historic regional powers, have been vying for predominance in the Caucasus, as each regards the oil-rich region as within its traditional sphere of influence.
But now a fourth player, the West, has joined the competition in this remote, but strategically located corner of the former Soviet Union, which is believed to contain the world's biggest known reserves of oil and natural gas outside the Persian Gulf and Russia itself. Some experts have predicted that the Caucasus could become the second largest energy supplier to the West , thus reducing present-day dependence on the Persian Gulf (although the latter's proven oil reserves of 600 billion barrels admittedly dwarf the Caspian Basin's potential of 68 billion barrels).
As a consumer of about 6 billion barrels of crude oil annually, the US is particularly interested in developing new sources of energy to avoid another worldwide fuel shortage, especially if the embargo on Saddam Hussein's oil exports continues. But Russia, which is determined to maintain a predominant influence in the region, has responded to what it perceives as Western intrusion in its backyard with its own version of the Monroe Doctrine.
Unstable and conflict-ridden Azerbaijan, whose huge share of the Caspian hydrocarbon wealth promises to make it a new Kuwait, is caught in the middle, as is neighboring Georgia, though to a far lesser extent.
Russia had maintained tight control over the energy resources of the region since the 19th century. Azerbaijan was the center of the oil industry of Imperial Russia, accounting for half of the world's oil production in 1901.
Although the Baku fields lost much of their earlier significance, Azerbaijan was still the Soviet Union's second largest oil producer, after the Russian SFSR. The region produced just 3 percent of Soviet oil in 1991, but new
exploration revealed the presence of significant amounts of recoverable oil and natural gas in the Caspian shelf, igniting a new struggle for control of these resources.
A US-led production-sharing agreement was signed in September 1994 for the exploitation of these deep-sea reserves, estimated at 4 billion barrels. The contract, worth nearly 48 billion, provides for the development of the
off-shore fields Gyuneshli, Azeri and Chirag in the Caspian shelf near Baku, from which 32 million tons of the so-called "early oil" will be exported in the next seven years. The 11-company consortium established to develop this project includes Amoco (17 percent,), BP (17 percent), Unocal (11 percent), Azerbaijan's SOCAR (10 percent), the Russian LukOil (10 percent), Pennzoil (9.8 percent), Statoil of Norway (8.5 percent), the Turkish Tpao (6.75 percent), Exxon (5 percent), McDermott (2.45 percent), British Ramco (2 percent), and Saudi Delta (0.5 percent). The project is expected to pump at least 511 million tons of crude over 30-year period, yielding profits of $50 billion or more at current prices.
But the megaproject has run into Russian and Iranian opposition. Mutual defense agreements concluded with Armenia and Georgia have effectively extended Russian control over the Transcaucasus. Moscow's strategy of reasserting its economic and military-political influence in the region includes the goal of dominating the production and transportation of Caspian oil to world markets. Its insistence on playing a special role in the region has led to growing friction with Baku. Originally excluded from the "contract of the century," Moscow appeared ready to torpedo the deal, claiming that Western economic penetration in the oil-bearing region posed a threat to its national security interests. As a result of heavy lobbying by Moscow, LukOil ultimately received a 10-percent concession, but the Russians, who are resolved not to play second fiddle to the West in an area that until recently was part of their empire, are unhappy that American companies hold a commanding 45-percent share of the contract.
To further squeeze Baku, the Russian Foreign Ministry has sent two diplomatic notes to the Azerbaijani government, accusing it of unilateral exploitation of Caspian mineral resources and threatening sanctions. Moscow maintains that the Caspian is not a sea to which international maritime law applies, but an international lake, whose legal status should he decided jointly by all five littoral states, thus giving the Russians an effective veto power over oil and natural gas extraction. With American backing, Baku has taken the opposite position, as did a draft convention proposed by Kazakhstan (which Moscow has rejected).
Nor has Moscow refrained from using more forceful methods to convince the Transcaucasian governments of the desirability of complying with its wishes. Russia is suspected of being behind efforts to destabilize Azerbaijan and Georgia as part of its long- term strategy to control the Caucasus and its oil wealth. Right from the beginning of the Chechen war, Moscow has closed the Russian-Azeri border, through which 70 percent of Baku's foreign trade had passed. This effective blockade, which has reportedly cost Azerbaijan $250 millions in economic losses, was a reminder of the region's vulnerability to Moscow's blackmail and strong-arm tactics. The Russian secret service has been implicated in a series of recent coup plots and attempted presidential assassinations in both Azerbaijan and Georgia. [...]
amber.ucsf.edu |
