Caspian oil to go through Bulgaria, Macedonia, and Albania.....Hey guys, I think I just found the real reason for this war.....Or was it really to save the Albanians?<g>
WASHINGTON, June 23 (UPI) -- The U.S. government has given Bulgaria a
half-million dollar grant to explore building a pipeline across the
Balkans to pump Caspian Sea oil to the West, sending shock waves through
Turkey, a key U.S. ally that wants the potentially lucrative pipeline
for itself.
On June 2, the U.S. Trade and Development Agency announced it had
awarded the $588,000 grant to Bulgaria to carry out a feasibility study
for the pipeline. Under the proposed plan, Caspian oil would be shipped
by tanker from the Black Sea ports of Novorossiysk in Russia and from
Supsa in former Soviet Georgia and then pumped by overland pipeline
across Bulgaria, [FYR] Macedonia and Albania to waiting European consumers.
''This grant represents a significant step forward for this policy
(of multiple pipeline routes) and for U.S. business interests in the
Caspian region,'' said TDA Director J. Joseph Grandmaison.
The decision came shortly before NATO and Russia reached agreement on
how to force an end to the Kosovo conflict. The decision has raised
speculation among regional experts that it may be part of a larger
economic development plan envisioned by the Clinton administration to
stabilize the southern Balkans after the massive dislocations and
infrastructure damage caused by the Serbian repression in Kosovo and the
U.S.-led NATO bombing of Serbia.
The new strategic importance of the trans-Balkans region to U.S.
policy makers could now justify its designation as a Main Export
Pipeline for Caspian oil. But that could undermine any chance Turkey had
to build its own much-heralded pipeline to pump Caspian crude from the
Azerbaijani capital of Baku to its own port of Ceyhan.
That 1,100-mile Turkish route was initially viewed by energy experts
as the outstanding choice to transport the newly discovered oil
treasures of the Caspian Sea to Western consumers. But its development
has been plagued by geopolitical and economic problems.
The Turkish pipeline route was promoted by both the U.S. and Turkish
governments. But unexpectedly low world oil prices, stagnant demand,
lower-than-anticipated Caspian production and the continuing Azeri-
Armenian conflict have all taken their toll.
Any agreement between Azerbaijan, Turkey and Georgia to building the
Baku-Ceyhan pipeline has been indefinitely postponed. Its estimated
costs have soared to between $2.5 billion to $4 billion. Private
investor capital has been lacking for the project as other investment
opportunities in oil-rich zones like West Africa's Gulf of Guinea, the
Gulf of Mexico and offshore Brazil offer more secure returns in less
risky economic and security environments.
The proposed trans-Balkan line would be much cheaper. Its estimated
cost runs between $800 million to $1 billion. The continuing conflicts
in Yugoslavia have made it appear impractical in past years. But the
prospect that the U.S. government would guarantee security in the region
and also provide financial guarantees now makes it a much more
attractive proposition.
Caspian oil investors have grown impatient with the seemingly
intractable problems of developing the Turkish option. But there now is
a growing expectation among them that Washington will provide financial
guarantees for a project it regards as a priority strategic objective to
economically jump-start the southern Balkans.
A pipeline recently was opened from Baku to Supsa in Georgia,
expanding the range and capacity of a little-used pipeline that had been
used to pump oil from the port of Supsa to Tbilisi.
Energy analysts now say it can handle all current production from the
Azeri oil fields and, if needed, could double its current capacity to
200,000 to 250,000 barrels per day to meet projected increases in Azeri
production in the near term. That would remove the need to soon build a
more costly additional pipeline -- as originally envisaged -- to Ceyhan in
southeastern Turkey. A second Baku-Supsa pipeline to boost capacity also
is a distinct possibility, being obviously cheaper to build than the
Turkish option.
Building the trans-Balkans pipeline now would allow it to pick up the
oil shipped across the Black Sea from the Supsa terminal. Russia and
Greece are more likely to support this project than a pipeline through
their regional adversary Turkey, and Russian and Greek companies could
expect to be lucrative major contractors in building the pipeline
through [FYR] Macedonia and Bulgaria.
The pipeline also would satisfy environmentalist groups who have
expressed concern that tankers laden with Caspian crude would threaten
immense environmental damage to the Bosporus sea lane between the Black
Sea and the Mediterranean.
The Bulgaria-[FYR] Macedonia-Albania route has already won support in
Moscow and from the Chevron-led Caspian Pipeline Consortium that is
developing the Caspian-Kazakhstan oil deposits. The main export line for
Caspian crude will run through Russian territory to the Black Sea
deposit at Novorossiysk and then by oil tankers to consumers.
Faced with the politically embarrassing prospect of losing a mega-
project that would have greatly enhanced Turkey's regional posture,
Turkish officials and policy experts are beginning to question the
assumptions upon which the pipeline was to be constructed.
At a recent regional policy conference in Istanbul, organized by the
non-partisan ARI Movement, both Professor Hasan Koni of Ankara
University and former Ambassador Gunduz Aktan expressed concern and
reservations over Turkey's handling of the pipeline issue, given that
Ankara's commitment to the project dates from 1992. Aktan is general
director of the Turkish Economic and Social Studies Foundation.
Other Turkish authorities have conceded privately that Ankara had
underestimated Russia's capacity to extend its influence in the southern
Caucasus states of Armenia and Georgia, thereby dictating a high-risk
security environment to the building and maintenance of the Baku-Ceyhan
line.
Ankara also was blindsided by the sudden collapse of oil prices in
1997 and its impact on investor confidence towards a project whose high
cost could not be covered by revenue from Caspian oil exports running as
low as the International Energy Agency's estimate of 1.5 million to 2.3
million barrels per day.
Operating under the assumption that American private capital would
eagerly follow Washington's pronouncements in support of Baku-Ceyhan,
Ankara miscalculated that Turkey's NATO-based strategic relationship
with the United States would be strong enough to overpower any
commercial and security obstacles blocking the emergence of Baku-Ceyhan
as the key Caucasus oil trans-shipment route. But now Turkey realizes it
can no longer take this for granted.
Other oil pipeline routes through the region which also would bypass
Turkey are now being considered by investors and corporate planners.
They include a Turkmenistan-to-Iran route that would ship Central
Asian oil south to Persian Gulf oil terminals and even a proposed 2,100
mile pipeline across Central Asia to the east from Kazakhstan to the oil
hungry, rapidly- growing industries of China.
These plans too threaten to undermine long-term investor confidence
in the Baku-Ceyhan project. The Turkish government is therefore
beginning to recognize the need to redefine its energy policy and
pipeline strategy.
On June 21, Ankara announced that its state oil company, Turkish
Petroleum, had entered into a joint venture agreement with Atlantic
Richfield (ARCO) for oil and gas drilling operations in Turkey's Black
sea waters.
The move heralds the opening of Turkey's long-nationalized oil sector
to U.S. capital and technology and indicates a new willingness to woo
American private investors to seek Washington's support for the
threatened Baku-Ceyhan project.
---
Paul Michael Wihbey is a senior fellow at the Institute for Advanced
Strategic and Political Studies, a think tank based in Washington.
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